Question

Calculating additions to NWC. The December 31, 2013, balance sheet of Maria's Tennis Shop, Inc. showed current assets of $1,045 and current liabilities of $960. The December 31, 2014 balance sheet showed current assets of $1,310 and current liabilities of $1,090. What was the company's 2014 change in net working capital, or NWC?

Answer 1

The company's 2014 change in net working capital, or NWC is $135

Step-by-step explanation:

The formula should be used to compute the changes in the net working capital which is shown below:

= (Net Working Capital 2014 - Net working capital 2013)

where,

Net working capital = Current assets - Current liabilities

= (Currents Assets 2014 - Current Liabilities 2014) - (Currents Assets 2013 - Current Liabilities 2013)

= ($1,310 - $1,090) - ( $1,045 - $960)

= $220 - $85

= $135

Hence, the company's 2014 change in net working capital, or NWC is $135