The Caraway Seed Company grows heirloom tomatoes and sells their seeds. The heir

Question

The Caraway Seed Company grows heirloom tomatoes and sells their seeds. The heirloom tomato plants are preferred by many growers for their superior flavor. At the end of the most recent year the firm had current assets of $50,700, net fixed assets of $251,100, current liabilities of $28,600, and long-term debt of $100,000.

a. Calculate Caraway's stockholders' equity.

b. What is the firm's net working capital?

c. If Caraway's current liabilities consist of $20,100 in accounts payable and $8,500 in short-term debt (notes payable), what is the firm's net working capital?

A) The firm's net working capital will change by $8,500,i.e.,net working capital =$30,600.

B.The firm's net working capital will not change, i.e.,net working capital =$22,100.

C. The firm's net working capital will change by$20,100+$8,500,i.e.,net working vapital =$50,700.

D. The firm's net working capital will change by$20,100,i.e.,net working capital=$42,200.

Explanation / Answer

Total asset = 50700 +251100 = 301800

Total liabilities = 28600+100000= 128600

A)Equity =TOtal asset -Total liabilties

              = 301800-128600 = 173200

B)Net working capital =Current asset -current liabilities

                          = 50700-28600 =22100

c)The firm's net working capital will not change, i.e.,net working capital =$22,100.

As note payable is a considered as short term current liabilty thus will be considered while calculating neet working capital .No effect on working capital from this details.

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