Auto Detailers has a book net worth of $29,700. Long-term debt is $4,800. Net working capital, other than cash, is $3,700 and fixed assets are $27,400. How much cash does the company have?

Question

Quizplus · Accepted Answer

To find the amount of cash the company has, we need to use the formula for net worth: 
Net Worth = Fixed Assets - Long-term Debt + Net Working Capital Other Than Cash + Cash
We know all the values except cash. So, we can rearrange the formula and solve for cash: 
Cash = Net Worth - Fixed Assets + Long-term Debt - Net Working Capital Other Than Cash 
= $29,700 - $27,400 + $4,800 - $3,700 
= $3,400 
Therefore, the company has $3,400 of cash. Option D is the correct answer.

Auto Detailers Has a Book Net Worth of $29,700