Question

You are evaluating the balance sheet for Cypress Corporation. From the balance sheet you find the following balances:Cash and marketable securities = $610,000, Accounts receivable = $810,000, Inventory = $510,000, Accrued wages and taxes = $51,000, Accounts payable = $201,000, and Notes payable = $1,010,000. What is Cypress's net working capital?

Answer 1

Cypress Corporation's net working capital is calculated by subtracting its current liabilities from its current assets, resulting in a net working capital amount of $668,000.

Step-by-step explanation:

To calculate the net working capital for Cypress Corporation, we need to subtract the current liabilities from the current assets. The current assets are the sum of cash and marketable securities ($610,000), accounts receivable ($810,000), and inventory ($510,000), which totals to $1,930,000. The current liabilities are the sum of accrued wages and taxes ($51,000), accounts payable ($201,000), and notes payable ($1,010,000), amounting to $1,262,000. Therefore, the net working capital for Cypress Corporation is $1,930,000 - $1,262,000 = $668,000.

Net working capital is an important measure of a company's liquidity and its ability to meet short-term obligations. It is calculated as current assets minus current liabilities.

Answer 2

The answer is $668,000

Step-by-step explanation:

Net working capital = current asset - current liability.

Under current asset, we have Cash and marketable securities($610,000) Accounts receivable($810,000) Inventory($510,000)

And under current liability, we have

Accrued wages and taxes($51,000) Accounts payable($201,000), Notes payable($1,010,000)

Current asset = $610,000+$510,000+$810,000 = $1,930,000

Current liability = $51,000+$201,000+$1,010,000=$1,262,000

Therefore, net working capital =$1,930,000 - $1,262,000

=$668,000