Lola Corp. has shareholders' equity of $132,800. The company has a total debt of $124,250, of which 55 percent is payable in the next 12 months. The company also has net fixed assets of $176,450.
What is the company's net working capital?
a. $14,079
b. $18,391
c. $8,175
d. $15,068
e. $73,965

The company's net working capital is $24,687.5

Explanation:

Net working capital is the aggregate amount of all current assets and current liabilities and is used to measure the short-term liquidity of a business. Net working capital is calculated by the formula:

Net working capital = Current assets - Current liabilities

The company has a total debt of $124,250, of which 55 percent is payable in the next 12 months.

Current liabilities  = $124,250 - 55% x $124,250 = $55,912.5

Basing on accounting equation:

Total assets = Total liabilities  (debt) + shareholders' equity = $124,250 + $132,800 = $257,050

The company has net fixed assets of $176,450.

Current assets = Total assets - Net fixed assets = $257,050 - $176,450 = $80,600

Net working capital = $80,600 - $55,912.5 = $24,687.5

answer; the correct answer is (direct foreign investment);