Question

Prezas Company's balance sheet showed total current assets of $4,401, 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 (NOWC)

Answer 1

Answer:

$3,176

Explanation:

Computation of net operating working capital

Using this formula

Net operating working capital=Current assets less ( Current liabilities less Notes payable)

Where,

Current assets=$4,401

Current liabilities =($975+$600+$250=$1,825)

Notes payable =$600

Let plug in the formula

Net operating working capital=$4,401-($1,825-$600)

Net operating working capital=$4,401-$1,225

Net operating working capita=$3,176

Therefore the Net operating working capital or NOWC will be the amount of $3,176