Answer:
- $0.5 million
Explanation:
The computation of the net working capital is shown below:
We know that
Net working capital = Current assets - current liabilities
where,
Current assets = $1 million
The net fixed assets = Gross fixed assets - Accumulated depreciation
= $20 million - $7 million
= $13 million
Total assets = Current assets + net fixed assets
= $1 million + $13 million
= $14 million
And,
Total assets = Total liabilities + owners equity
$14 million = Total liabilities + $7.5 million
So, the total liabilities is
= $14 million - $7.5 million
= $6.5 million
Total liabilities = Current liabilities + long term debt
$6.5 million = Current liabilities + $5 million
So, Current liabilities is $1.5 million
Now the net working capital equal to
= $1 million - $1.5 million
= - $0.5 million
