Question

A Corporation had net current assets of $2,000,000 at the end of 2019 and $1,800,000 at the end of 2018. In addition, the corporation had net spontaneous current liabilities (i.e.; Account payable + Accruals) of $1,000,000 in 2019 and $1,500,000 in 2018. Using this information, the corporation's net current asset investment for 2019 was

Answer 1

The net current assets is also known as the net working capital. It is equal to the sum of current assets minus the sum of current liabilities.

The net current assets or net working capital measures the amount of funds that a company has to meet its financial obligations. This number should be high enough to allow for debt payments without the sale of fixed assets.

In this case, the net current asset investment for 2019 is:

$2,000,000 - $1,000,000 = $1,000,000