Question

4. (10 points). Prezas Company's balance sheet showed total current assets of $4,250, all of which were required in operations. Its current liabilities consisted of $975 of accounts payable, $600 of 6% short-term notes payable to the bank, and $250 of accrued wages and taxes. What was its net operating working capital

Answer 1

Answer: $3,025

Step-by-step explanation:

The Net Working Capital is used to find out if the company is able to use its current assets to cater for it's Current Liabilities and as such is calculated by subtracting Current Assets from Current Liabilities.

= Current Assets - Current Liabilities

Current Liabilities = 975 + 250

= $1,225

The interest bearing funds are not included when Calculating Net Working Cap.

Net Working Capital = 4,250 - 1,225

= $3,025