Question

Rousey, Inc., had a cash flow to creditors of $16,920 and a cash flow to stockholders of $7,496 over the past year. The company also had net fixed assets of $49,680 at the beginning of the year and $57,100 at the end of the year. Additionally, the company had a depreciation expense of $12,228 and an operating cash flow of $51,069. What was the change in net working capital during the year?

Answer 1

Change in net working capital during the year is $7,005

Step-by-step explanation:

Given the above data,

Cash flow from assets = Cash flow to creditors + Cash flow to shareholders

= $16,920 + $7,496

= $24,416

Opening cash flow from financial assets = Operating cash flow - *Net capital spending - Change in net working capital.

$24,416 = $51,069 - ($57,100 - $49,680 + $12,228 - Change in working capital

$24,416 = $51,069 - $19,648 - Change in net working capital

$24,416 = $31,421 - Change in net working capital

Change in net working capital = $31,421 - $24,416

Change in net working capital = $7,005

Please note that net capital spending = net fixed assets at the end - net fixed assets at the beginning + depreciation expenses.