A firm’s balance sheets for year-end 2011 and 2012 contain the following data. A
ID: 2713339 • Letter: A
Question
A firm’s balance sheets for year-end 2011 and 2012 contain the following data. All items are in millions of dollars.
Calculate the net working capital in 2011. (Enter your answer in millions rounded to 1 decimal place.)
Calculate the net working capital in 2012. (Enter your answer in millions rounded to 1 decimal place.)
What happened to investment in net working capital during 2012? (Input the amount as a positive value. Enter your answer in millions rounded to 1 decimal place.)
A firm’s balance sheets for year-end 2011 and 2012 contain the following data. All items are in millions of dollars.
Explanation / Answer
a)
Year 2011
Net working capital = Current Assets – Current liabilities
Current Assets = Account Receivables + Inventory = $(33.6 + 30.6) =$67.2
Current liabilities = Accounts payable = $ 26.6
Net working capital = $40.60
b)
Year 2012
Current Assets = Account Receivables + Inventory = $(33.2 + 26.2) =$59.4
Current liabilities = Accounts payable = $ 13.2
Net working capital = $46.2
c) Investment = Net working capital at the end of 2012 - Net working capital at the end of 2011
= $(46.2 - 40 .6) =$5.6
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