Question

You are evaluating the balance sheet for Goodman's Bees Corporation. From the balance sheet you find the following balances: cash and marketable securities = $400,000, accounts receivable = $1,200,000, inventory = $2,100,000, accrued wages and taxes = $500,000, accounts payable = $800,000, and notes payable = $600,000.

Answer 1

$1,800,000

Step-by-step explanation:

The computation of the net working capital is shown below:

Net working capital = Current assets - current liabilities

where,

Current assets = Cash and marketable securities + Accounts receivable + Inventory

= $400,000 + $1,200,000 + $2,100,000

= $3,700,000

And, the current liabilities = accrued wages and taxes + Account payable + notes payable

= $500,000 + $800,000 + $600,000

= $1,900,000

So, the net working capital is

= $3,700,000 - $1,900,000

= $1,800,000