Question

Prezas Company's balance sheet showed total current assets of $4,250, all of which were required in operations. Its current liabilities consisted of $975 of accounts payable, $600 of 6% short-term notes payable to the bank, and $250 of accrued wages and taxes. What was its net operating working capital?

Answer 1

Answer:

The Net working capital is 3025 dollars.

Explanation:

Total current assets in the balance sheet = $4250

The current liabilities in the balance sheet = $975

Account payable = $600

Accrued wages and taxes = $250

Below is the calculation of net operating working capital.

Net working capital = current assets – current liabilities.

Net working capital = 4250 – (975 + 250)

Net working capital = 4250 – 1225

Net working capital = 3025 dollars.

Here, interest will not be considered. So the net working capital is $3025