Question

Black Top Express has $1,320 of cash, inventory of $10,200, net fixed assets of $33,600, accounts payable of $3,650, accounts receivable of $3,780, and long-term debt of $18,100. All costs, net working capital, and fixed assets vary directly with sales. Sales are projected to increase by 4.8 percent annually. What is the pro forma net working capital for next year

Answer 1

Answer:

$12,209

Explanation:

The computation of the pro forma net working capital is shown below;

Add items

Cash           $1,383                     {$1,320 × (1 + 4.8%)}

Inventory    $10,690                        {$10,200 × (1+4.8%) }

Accounts receivable $3,961                {$3,780 × (1 + 4.8%)}

Less

Accounts payable -$3,825               {$3,650 × (1 + 4.8%)}

Pro forma net working capital           $12,209

We simply added the current assets and deduct the current liabilities

Answer 2

The pro forma net working capital for next year is $12,209.

Pro forma net working capital = ($1,320 + $3,780 + $10,200 − $3,650)× (1+.048)

Pro forma net working capital = ($1,320 + $3,780 + $10,200 − $3,650)× (1.048)

Pro forma net working capital = $11,650× 1.048

Pro forma net working capital = $12,209

Inconclusion the pro forma net working capital for next year is $12,209.

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