Question

Prezas Company's balance sheet showed total current assets of $3,250, 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?
a. $2,025
b. $2,309
c. $1,721
d. $1,620
e. $1,701

Answer 1

Answer:

a. $2,025

Explanation:

The net working operating capital is computed as;

= Current assets - Current liabilities

Where;

Current assets = $3,250

Current Liabilities. = $975 + $250

= $1,225

Net working capital = $3,250 - $1,225

= $2,025

*Please note that we will not factor in interest bearing funds for the purpose of calculating working capital.