Working capital: Laurel Electronics reported the following information at its an

Question

Working capital: Laurel Electronics reported the following information at its annual meetings. The company had cash and marketable securities worth $1,235,455, accounts payables worth $4,159,357, inventory of $7,121,599, accounts receivables of $3,488,121, short-term notes payable worth $1,151,663, and other current assets of $121,455. Suppose marking-to-market reveals that the market value of the firm’s inventory is 61 percent below its book value and its receivables are 71 percent below its book value. The market value of its current liabilities is identical to the book value.

What is the firm's net working capital using market values?

What is the percent difference in net working capital?

Explanation / Answer

We can see from the given information Current Assets Cash and marketable securities = $1,235,455 Inventory = $7,121,599 Accounts Receivables = $3,488,121 Other current assets = $121,455 Total Current Assets = $11,966,630 Current Liabilities Accounts payable = $4,159,357 Short term notes payable = $1,151,663 Total Current Liabilities = $5,311,020 We know Net Working Capital = Total Current Assets - Total Current Liabilities $11,966,630 - $5,311,020 = $6,655,610 Hope this helps

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