given the following information. how do you determine change in net working capi
ID: 2648192 • Letter: G
Question
given the following information. how do you determine change in net working capital
#
Items as indicated above (List below)
Years >
0
1
2
3
4
5
1
Initial invest
-7000
2
Net revenues
5000
5000
5000
5000
5000
3
Cash op. exp.
3000
3000
3000
3000
3000
4
Depr. Exp.
[a]
1240
1240
1240
1240
1240
5
Sale/salvage
800
6
Cost of capital
List %
10%
7
Change net working capit.
#
Items as indicated above (List below)
Years >
0
1
2
3
4
5
1
Initial invest
-7000
2
Net revenues
5000
5000
5000
5000
5000
3
Cash op. exp.
3000
3000
3000
3000
3000
4
Depr. Exp.
[a]
1240
1240
1240
1240
1240
5
Sale/salvage
800
6
Cost of capital
List %
10%
7
Change net working capit.
Explanation / Answer
Change in net working capital - we are calculating change in working capital with below mention sequence.
Sales Revenue - Operating Expense - Taxes - Net Investment = Change in Working Capital
Items as indicated above (List below) Years > 0 1 2 3 4 5 Intial Investment (7000) Opening Balance of Working Capital (7000) (6240) (5480) (4720) (3960) Revenues 5000 5000 5000 5000 5000 Less: Cash Ope. Exp. 3000 3000 3000 3000 3000 Less: Depriciation Exp. 1240 1240 1240 1240 1240 Add: Sale / Salvage 800 Change in Net Working Capital (7000) (6240) (5480) (4720) (3960) (2400)Related Questions
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