Math Problem Statement

A balance sheet has total assets of $1,892, fixed assets of $1,306, long-term debt of $692, and short-term debt of $233. What is the net working capital?

Solution

To calculate Net Working Capital (NWC), we use the formula:

Net Working Capital=Current AssetsCurrent Liabilities\text{Net Working Capital} = \text{Current Assets} - \text{Current Liabilities}

Step 1: Determine Current Assets

From the total assets ($1,892) and fixed assets ($1,306): Current Assets=Total AssetsFixed Assets=1,8921,306=586\text{Current Assets} = \text{Total Assets} - \text{Fixed Assets} = 1,892 - 1,306 = 586

Step 2: Determine Current Liabilities

From the information provided, the current liabilities are the short-term debt: Current Liabilities=233\text{Current Liabilities} = 233

Step 3: Calculate Net Working Capital

Net Working Capital=Current AssetsCurrent Liabilities=586233=353\text{Net Working Capital} = \text{Current Assets} - \text{Current Liabilities} = 586 - 233 = 353

Final Answer:

Net Working Capital=353\text{Net Working Capital} = \boxed{353}

Would you like more details or assistance with another calculation?

Here are some related questions for exploration:

  1. How does net working capital influence a company's liquidity?
  2. What are other components of current assets and current liabilities?
  3. Can net working capital be negative, and what does it imply?
  4. How does this calculation relate to the overall health of a company's balance sheet?
  5. How are long-term debts accounted for in working capital analysis?

Tip: Always ensure accurate classification of assets and liabilities when analyzing financial statements to avoid misinterpretations!

Ask a new question for Free

By Image

Drop file here or Click Here to upload

Math Problem Analysis

Mathematical Concepts

Accounting
Working Capital Calculation
Basic Arithmetic

Formulas

Net Working Capital = Current Assets - Current Liabilities

Theorems

-

Suitable Grade Level

College or Professional Level