The following items are components of a firm's balance sheet. How much is the firm's working capital (net working capital)? $\begin{array}{lr}
\text {Cash }&\$ 2,000 \
\text {Long-term debt }&10,000\
\text {Inventory }&12,000\
\text {Owners' equity }&62,000\
\text {Accounts payable }&8,000\
\text {Accruals }&1,500\
\text {Accumulated depreciation }&6,000\
\text {Accounts receivable }&14,000\
\end{array}$

Question

Quizplus · Accepted Answer

Working capital is calculated as current assets minus current liabilities. Current assets include cash ($2,000), inventory ($12,000), and accounts receivable ($14,000), totaling $28,000. Current liabilities include accounts payable ($8,000) and accruals ($1,500), totaling $9,500. Thus, working capital is $28,000 - $9,500 = $18,500.

The Following Items Are Components of a Firm's Balance Sheet