Question

Chang and Smith Tours has the following balance sheets: 2018 2019 Assets Cash $190 $190 Accounts Receivable 684 726 Inventory 918 1,023 Net Fixed Assets 2,027 1,996 Total Assets $3,819 $3,935 Liabilities and Equity Accounts Payable $788 $818 Notes Payable 306 302 Long-Term Debt 1,647 1,722 Stockholders' Equity 1,078 1,093 Total Liabilities and Equity $3,819 $3,935 What is the change in net working capital during the year 2019

Answer 1

$121

Step-by-step explanation:

Change in net working capital is calculated as ; Working capital(Current year) minus Working capital (Previous year)

Since we are considering 2019,

•Current assets in 2018 = Cash + accounts receivable + inventory

= 190 + 684 + 918

= $1,792

•Current liabilities in 2018 = Accounts payable + notes payable

= $788 + $306

= $1,094

Working capital(previous year)

= $1,792 - $1,094

= $698

•Current assets in 2019 = Cash + Accounts receivable + inventory

= 190 + 726 + 1,023

= $1,939

•Current liabilities in 2019 = Accounts payable + notes payable

= 818 + 302

= $1,120

Working capital(current year)

= $1,939 - $1,120

= $819

Therefore,

Changes in net working capital

= $819 - $698

= $121