Essentials of Corporate Finance
Essentials of Corporate Finance
8th Edition
ISBN: 9780078034756
Author: Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan
Publisher: MCGRAW-HILL HIGHER EDUCATION
Question
Book Icon
Chapter 2, Problem 2.1C
Summary Introduction

To discuss: Net working capital

Introduction:

The difference between the net current assets and net current liabilities are termed as net working capital.

Expert Solution & Answer
Check Mark

Answer to Problem 2.1C

The net working capital is $5,400.

Explanation of Solution

Given information:

Total assets are $43,200, total equity are $25,600, net fixed assets are $31,700 and long term debt are $11,500.

The formula to calculate the net working capital:

Net working capital=Current assetsCurrent liabilities=((Total assetsNet fixed assets)(Total liabilitiesTotal equityLong term debt) )

Compute the net working capital:

Net working capital=Current assetsCurrent liabilities=((Total assetsNet fixed assets)(Total liabilitiesTotal equityLong term debt) )=($43,200$31,700($43,200$25,600$11,500))=$5,400

Hence, the net working capital is $5,400.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Chapter 2 Solutions

Essentials of Corporate Finance

Knowledge Booster
Background pattern image
Recommended textbooks for you
Text book image
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Text book image
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:9781260013962
Author:BREALEY
Publisher:RENT MCG
Text book image
Financial Management: Theory & Practice
Finance
ISBN:9781337909730
Author:Brigham
Publisher:Cengage
Text book image
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Text book image
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Text book image
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education