Balance Sheet Assets Liabilities Current Assets Current Liabilities Cash. . . . . . . ....

Question

Question

Balance Sheet Assets Liabilities Current Assets Current Liabilities Cash. . . . . . . ....

Balance Sheet
Assets		Liabilities
Current Assets		Current Liabilities
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	50	Accounts payable. . . . . . . . . . . . . . . . . . . . .	37
Accounts receivable. . . . . . . . . . . . . . . . . .	22	Notes payable/short term debt. . . . . . . . . . .	6
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . .	19	Total current liabilities. . . . . . . . . . . . . . . .	43
Total current assets. . . . . . . . . . . . . . . . . . . . .	91

Long-Term Assets		Long-Term Liabilities
Net property, plant, and equipment. . . . . . . . .	119	Long-term debt. . . . . . . . . . . . . . . . . . . . . . . .	136
Total long-term assets. . . . . . . . . . . . . . . . . . .	119	Total long-term liabilities. . . . . . . . . . . . . . . .	136

		Total liabilities. . . . . . . . . . . . . . . . . . . .	179
		Stockholders' Equity. . . . . . . . . . . . . . . . . .	31
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . .	210	Total liabilities and stockholders' Equity	210

The above diagram shows a balance sheet for a certain company. If the company pays back all of its accounts payable today using cash, what will its net working capital be?

A.

4848

million

B.

1313

million

C.

134134

million

D.

9191

million

business finance

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

Solution:

The formula for calculating the Net working Capital is

= Total Current Assets – Total Current Liabilities

As per the information given in the question the company pays back all of its accounts payable today using cash. This implies that

a.The cash balance decreases by the amount of Account payable paid back.

Thus before payment of Accounts payable balance, the Accounts payable balance = $ 37 million

and Cash balance = $ 50 million

After payment of Accounts payable balance, the cash balance = $ 50 million - $ 37 million = $ 13 million.

b.The Accounts payable balance becomes zero.

Thus, post payment of Accounts payable using cash, the total current assets balance is calculated as follows :

a.The total current assets is = Cash + Accounts receivable + Inventories

= $ 13 million + $ 22 million + $ 19 million

= $ 54 million

Thus total current assets = $ 54 million

Thus, post payment of Accounts payable using cash, the total current liabilities balance is calculated as follows :

b.The total current liabilities = Accounts payable + Notes payable/short term debt

= $ 0 million + $ 6 million

= $ 6 million

Thus total current liabilities = $ 6 million

Thus applying the information above in the formula we have the Net working capital as:

= $ 54 million - $ 6 million

= $ 48 million

Thus if the company pays back all of its accounts payable today using cash, its net working capital will be equal to $ 48 million

The solution is option A. $ 48 million

Add a comment

Answer 2

Similar Homework Help Questions

Balance Sheet Assets Liabilities Current Assets Current Liabilities Cash . . . . . . ....

Balance Sheet Assets Liabilities Current Assets Current Liabilities Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Accounts payable . . . . . . . . . . . . . . . . . . . . . 36 Accounts receivable . . . . . . . . . . . . . . ....
Balance Sheet Assets Liabilities Current Liabilities Current Assets 49 36 20 Accounts payable Notes payable/short term...

Balance Sheet Assets Liabilities Current Liabilities Current Assets 49 36 20 Accounts payable Notes payable/short term debt Total current liabilities ====== Cash Accounts receivable Inventories Total current assets 5 15 41 84 Long-Term Assets Long-Term Liabilities O A. - $1 million OB. $6 million OC. $43 million OD. - $6 million Long-Term Assets Long-Term Liabilities Net property, plant, and equipment Total long-term assets 126 126 Long-term debt Total long term abilities 135 135 Total liabilities Stockholders' Equity Total liabilities and...
Balance Sheet Assets Current Assets Cash Accounts receivable Inventories Total current assets Liabilities Current Liabilities $47...

Balance Sheet Assets Current Assets Cash Accounts receivable Inventories Total current assets Liabilities Current Liabilities $47 Accounts payable 23 Total current liabilities $40 40 86 Long-Term Liabilities Long-Term Assets Net property, plant, and equipment Total long-term assets 170 164 Long-term debt Total long-term 164 liabilities 170 Total Assets 250 210 Total Liabilities Stockholders' Equity Total Liabilities and Stockholders' Equity 250 The balance sheet for a small firm is shown above. All amounts are in thousands of dollars What is this...

6. Balance Sheet Assets Liabilities Current Assets Current Liabilities Cash . . . . . ....

6. Balance Sheet Assets Liabilities Current Assets Current Liabilities Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Accounts payable . . . . . . . . . . . . . . . . . . . . . 41 Accounts receivable . . . . . . . . . . . . . ....
The current assets and current liabilities sections of the balance sheet of Sheffield Company appear as...

The current assets and current liabilities sections of the balance sheet of Sheffield Company appear as follows. The current assets and current liabilities sections of the balance sheet of Shetfield Company appear as fcllows. LD COMPANY BALANCE SHEET (PARTIAL) DECEMBER 31, 2017 Cash 43,100 Accounts payable 63,430 Accounts receivable $91,400 Nates payable Less: Allowance for doubtful accounts 9,290 3,110 155,030 9,460 5300,700 $126,940 Prepaid expenses The following errors in tha corporation's accounting have been discovered: 1. January 2018 cash disbursements...
Cullumber Corporation Balance Sheet as of December 31, 2017 Liabilities and Equity: Assets: Cash and marketable...

Cullumber Corporation Balance Sheet as of December 31, 2017 Liabilities and Equity: Assets: Cash and marketable securities Accounts payable and accruals Accounts receivable Notes payable 300,000 Inventory Total current assets Total current liabilities Long-term debt $2,000,000 Net plant and equipment Common stock Retained earnings $1,250,000 Total assets Total liabilities and equity $8,000,000 You have the following information: Debt ratio 35 % 40 days DSO Current ratio 2.17 Inventory turnover ratio 4.000 Net sales $2.43 million Cost of goods sold =...

48. The balance sheet for Blineberry Corporation follows: Ending balance Beginning balance Assets: Current assets: Cash...

48. The balance sheet for Blineberry Corporation follows: Ending balance Beginning balance Assets: Current assets: Cash and cash equivalents $20,700 $12,200 Accounts receivable $10,100 $8,400 Inventory $39,700 $38,600 Total current assets $70,500 $59,200 Property, plant, and equipment $144,050 $135,500 Less accumulated depreciation $102,700 $95,200 Net property, plant, and equipment $41,350 $40,300 Total assets $111,850 $99,500 Liabilities and stockholders' equity: Current liabilities: Accounts payable $14,600 $9,500 Accrued salaries payable $15,800 $12,100 Other accounts payable $1,200 $6,300 Notes payable $1,500 $7,500 Total...
Luther Corporation Consolidated Balance Sheet December 31, 2006 and 2005 (in $ millions) Assets 2006 2005...

Luther Corporation Consolidated Balance Sheet December 31, 2006 and 2005 (in $ millions) Assets 2006 2005 Liabilities and Stockholders' Equity 2006 2005 Current Assets Current Liabilities Cash 56.1 58.5 Accounts payable 88.1 73.5 Accounts receivable 54.5 39.6 Notes payable / short-term debt 10.9 9.6 Inventories 44.8 42.9 Current maturities of long-term debt 40.7 36.9 Other current assets 5.0 3.0 Other current liabilities 6.0 12.0 Total current assets 160.4 144.0 Total current liabilities 145.7 132.0 ...
The balance sheet for Vernon Corporation follows: Current assets $ 246,000 Long-term assets (net) 761,000 Total...

The balance sheet for Vernon Corporation follows: Current assets $ 246,000 Long-term assets (net) 761,000 Total assets $ 1,007,000 Current liabilities $ 155,000 Long-term liabilities 457,000 Total liabilities 612,000 Common stock and retained earnings 395,000 Total liabilities and stockholders’ equity $ 1,007,000 Required Compute the following. (Round "Ratios" to 1 decimal place.) Working capital Current ratio Debt to assets ratio % Debt to equity ratio Following is the balance sheet of Adams Company for 2018: ADAMS COMPANY Balance sheet Assets...

The balance sheet for Munoz Corporation follows: Current assets Long-term assets (net) Total assets Current liabilities...

The balance sheet for Munoz Corporation follows: Current assets Long-term assets (net) Total assets Current liabilities Long-term liabilities Total liabilities Common stock and retained earnings Total liabilities and stockholders' equity $ 235,000 762,000 $997,000 $160,000 457,000 617,000 380,000 $997,000 Required Compute the following. (Round "Ratios" to 1 decimal place.) ace Working capital Current ratio Debt to assets ratio Debt to equity ratio

Balance Sheet Assets Liabilities Current Assets Current Liabilities Cash. . . . . . . ....

Homework Answers

Add Answer to:
Balance Sheet Assets Liabilities Current Assets Current Liabilities Cash. . . . . . . ....

Post as a guest

Earn Coins