Question

A balance sheet has total assets of $1,664, fixed assets of $1,156, long-term debt of $614, and short-term debt of $191. What is the net working capital?

Answer 1

Total assets $1664 - fixed assets of $1,156 = $508

Assets $508 - Short term debt $191 = $317

Net working capital = $317

Explanation: Working capital is the difference in operating current assets less operating current liabilities. This difference is based on the fact that the company's operating activities are sufficient to cover the commitments acquired to fund these activities.