Question

Rousey, Inc., had a cash flow to creditors of $16,785 and a cash flow to stockholders of $7,307 over the past year. The company also had net fixed assets of $49,605 at the beginning of the year and $57,010 at the end of the year. Additionally, the company had a depreciation expense of $12,156 and an operating cash flow of $50,868. What was the change in net working capital during the year

Answer 1

$7,215

Step-by-step explanation:

The change in net working capital can be determined using the formula cash flow from assets provided below:

Cash flow from assets=operating cash flows-net capital spending-change in working capital

Cash flow from assets=cash flow to creditors+cash flow to shareholders

Cash flow from assets=$16,785+$7,307=$24,092

operating cash flows=$50,868

net capital spending=$57,010-$49,605+ $12,156=$19,561

$24,092=$50,868-$19,561-change in working capital

change in working capital=$50,868-$19,561-$24,092

change in working capital=$7,215