Question

What is the net effect on a firm's working capital if a new project requires: $38,991 increase in inventory, $31,869 increase in accounts receivable, $35,000.00 increase in machinery, and a $41,802 increase in accounts payable

Answer 1

Answer: Increase by $29,058

Step-by-step explanation:

A firm's net working capital is the Current Assets less the current liabilities.

From the above, the current assets are; inventory and accounts receivable.

Current Assets

= 38,991 + 31,869

= $70,860

Current liabilities = Accounts payable = $41,802

Net effect on working capital

= 70,860 - 41,802

= $29,058