Swinnerton Clothing Company's balance sheet showed total current assets of $2,250, all of which were required in operations. Its current liabilities consisted of $575 of accounts payable, $300 of 6% short-term notes payable to the bank, and $145 of accrued wages and taxes. What was its net operating working capital?
Swinnerton Clothing Company's balance sheet showed total current assets of $2,250, all of which were required in operations. Its current liabilities consisted of $575 of accounts payable, $300 of 6% short-term notes payable to the bank, and $145 of accrued wages and taxes. What was its net operating working capital?
The Net Operating working capital is the difference between a company's current assets and current non-interest bearing liabilities. The current assets are those assets which can be converted into cash within 12 months. and current liabilities are those liabilities which are due to be paid within 12 months. Operating working capital excludes the interest bearing securities and debts as it falls under the Cash flow from financing activities and represent a method of raising necessary capital for funding the ongoing business activities.
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