Question

McRae Corporation's total current assets are $396,000, its noncurrent assets are $512,000, its total current liabilities are $348,000, its long-term liabilities are $262,000, and its stockholders' equity is $298,000. Working capital is:

Answer 1

Answer:

$48,000

Explanation:

The working capital is the business asset that is used for day to day operation. It can be calculated as follows,

Working capital = Current assets - Current liabilities

So,

Working capital = $396,000 - $348,000 = $48,000

It can be verified with the following equation

Fixed assets + Working Capital = Shareholder Equity + Long term Liabilities

Which is,

Fixed assets + Working Capital = $512,000 + $48,000 = $560,000

Shareholder Equity + Long term Liabilities = $298,000 + $262,000 = $560,000

Hope that helps.