Sing Lee's has accounts payable of $300, inventory of $250, cash of $50, ﬁxed assets of $500, accounts receivable of $200, and long-term debt of $400. What is the value of the net working
Capital to total assets ratio?
A) .20
B) .33
C) .40
D) .50
E) .67

Question

Quizplus · Accepted Answer

Net working capital is calculated as current assets minus current liabilities. Current assets are cash ($50), inventory ($250), and accounts receivable ($200), totaling $500. Current liabilities are accounts payable ($300). Net working capital is $500 - $300 = $200. Total assets are cash ($50), inventory ($250), accounts receivable ($200), and fixed assets ($500), totaling $1000. The net working capital to total assets ratio is $200 / $1000 = 0.20.

Sing Lee's Has Accounts Payable of $300, Inventory of $250