Question

You are evaluating the balance sheet for Goodman's Bees Corporation. From the balance sheet you find the following balances: cash and marketable securities = $560,000, accounts receivable = $2,000,000, inventory = $2,500,000, accrued wages and taxes = $610,000, accounts payable = $910,000, and notes payable = $710,000. Calculate Goodman's Bees' net working capital.

Answer 1

Answer:

$2,830,000

Explanation:

Net working capital is calculating by subtracting current liabilities from current assets

• current assets = cash and marketable securities + accounts receivable + inventories = $560,000 + $2,000,000 + $2,500,000 = $5,060,000
• current liabilities = accrued wages and taxes + accounts payable + notes payable = $610,000 + $910,000 + $710,000 = $2,230,000

net working capital = $5,060,000 - $2,230,000 = $2,830,000