Question

You are evaluating the balance sheet for Goodman's Bees Corporation. From the balance sheet you find the following balances: cash and marketable securities = $200,000, accounts receivable = $1,100,000, inventory = $2,000,000, accrued wages and taxes = $500,000, accounts payable = $600,000, and notes payable = $100,000. Calculate Goodman's Bees' net working capital.

Answer 1

Answer:

$2,100,000

Explanation:

Net working capital = Current assets - Current liabilities

First of all calculate the current assets and current liabilities

Current assets = cash and marketable securities + accounts receivable + inventory.

Current assets =  $200,000 +  $1,100,000 + $2,000,000

                        = $3,300,000

Current liabilities = accrued wages and taxes + accounts payable + notes payable

Current liabilities = $500,000 + $600,000 + $100,000

                            = $1,200,000

Net working capital = Current assets - Current liabilities

                                 = $3,300,000 - $1,200,000

                                 = $2,100,000

Thus,  Goodman's Bees' net working capital is $2,100,000.