Jeminson's Hardware has accounts payable of $682, inventory of $3,608, cash of $340, ﬁxed assets of $4,211, accounts receivable of $418, and long-term debt of $3,750. What is the value of the
Net working capital to total assets ratio?
A) .29
B) .37
C) .43
D) .47
E) .56

Question

Quizplus · Accepted Answer

Net working capital = Current assets - Current liabilities
Current assets = Accounts receivable + Inventory + Cash = $418 + $3,608 + $340 = $4,366
Current liabilities = Accounts payable = $682
Net working capital = $4,366 - $682 = $3,684
Total assets = Current assets + Fixed assets = $4,366 + $4,211 = $8,577
Net working capital to total assets ratio = Net working capital / Total assets = $3,684 / $8,577 = 0.43. Therefore, the best choice is C.

Jeminson's Hardware Has Accounts Payable of $682, Inventory of $3,608