Bonner Automotive has shareholders' equity of $218,700. The firm owes a total of $141,000 of which 40 percent is payable within the next year. The firm has net fixed assets of $209,800. What is the amount of the net working capital?

Question

Quizplus · Accepted Answer

Net working capital is calculated as current assets minus current liabilities. First, we need to find the total assets using the shareholders' equity and total debt. Total assets = Shareholders' equity + Total debt = $218,700 + $141,000 = $359,700. Current liabilities are 40% of the total debt, so $141,000 * 40% = $56,400. To find current assets, we subtract net fixed assets from total assets: $359,700 - $209,800 = $149,900. Therefore, net working capital = Current assets - Current liabilities = $149,900 - $56,400 = $93,500.

Bonner Automotive Has Shareholders' Equity of $218,700