Wu systems has the following balance sheet. assume that all current assets are used in operations. how much net operating working capital does the firm have? cash $ 100 accounts payable $ 200 accounts receivable 650 accruals 110 inventory 550 notes payable 590 current assets $ 1,300 current liabilities $ 900 net fixed assets $ 1,000 long-term debt 600 common equity 300 retained earnings 500 total assets $ 2,300 total liab. & equity $ 2,300 a. $782 b. $1,168 c. $911 d. $1,010 e. $990

The networking capital of the Wu Systems company is e) $ 990

Working capital is cash and assets that are easily cashed to fund the daily operations of the company. With working capital information, you can manage your business well and make the right investment decisions. By calculating working capital, you can also determine whether a company can pay its short-term obligations and in what period. Companies that lack or have no working capital will have problems later on. The working capital calculation is very useful to assess whether business activities are efficient enough in utilizing company resources. The formula for calculating working capital is:

Working capital = current assets - current debt.

Current asset

Current assets are company assets that can be converted into cash within one year. These assets consist of cash and other short-term accounts. Accounts included in current assets include trade receivables, prepaid expenses, and inventory.

This information is usually presented in the company's balance sheet with the description "current assets".

If the balance sheet does not include the number of current assets, read line by line. Add all the accounts by the definition of current assets to find out the numbers. You can add up accounts "accounts receivable", "inventory", "cash" and other accounts that are included in the cash category.

Debt smoothly

Current liabilities are liabilities that will mature in one year. Accounts included in current debt include trade debt, accrued debt, and notes payable.

The balance sheet should present the current debt amount. If you don't have it, you can add up the current debt accounts in the balance sheet, for example, "trade debt", "tax debt", "short-term debt" and "accrual".

Calculate the working capital of Wu System company

Current assets consist of:

Cash = $ 100

Receivables = $ 650

Inventory = $ 550

Current liabilities consist of:

Account debt = $ 200

Accruals = $ 110

Calculation

Working capital = current assets - current debt.

Working capital = ($ 100 + $ 650 + $ 550) - ($ 200 + $ 110)

Working capital = $ 990 (e)

Learn more

Calculation of working capital

Details

Class: College

Subject: Bussines

Keyword: Calculation of working capital.