Question

For the year, B&K United increased current liabilities by $1,400, decreased cash by $1,200, increased net fixed assets by $340, increased accounts receivable by $200, and decreased inventory by $150. What is the annual change in net working capital

Answer 1

Answer:

net working capital decreased by $2,250 during the year

Explanation:

net working capital = current assets - current liabilities

current assets: -$1,200 (cash) + $200 (accounts receivable) - $150 (inventory) = net change of -$850

current liabilities: +$1,400 (current liabilities) = net change of +$1,400

net change in working capital = -$850 - $1,400 = -$2,250

fixed assets are not included in this calculation