From the balance sheet below what is how much working capital is there?

Question

cash $25000
accounts payable $14000
accounts receivable $27000
notes payable due within one year $24000
merchandise inventory $24000
land $40000
notes payable due beyond one year $120000
equipment $33000
buildings $80000
accumulated depreciation: buildings & equipment $12000

Answer 1

Working capital = Current assets minus current liabilities.

Current Assets are:
cash $25000
accounts receivable $27000
merchandise inventory $24000
Total : $76,000

Current Liabilities are:
accounts payable $14000
notes payable due within one year $24000
Total : $38,000

So working capital = $76k - $38k = $38k

The current ratio is Current Assets/Current Liab = 76/38 = 2:1
or CA is twice the CL

Answer 2

Working capital is a financial term which represents the amount of day-by-day operating liquidity available to a business. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. It is calculated as current assets minus current liabilities. A company can be endowed with assets and profitability, but short of liquidity, if these assets cannot readily be converted into cash.

In the given question,current assets are cash $25000,accounts receivable $27000 and merchandise inventory $24000. So the sum total is $76000.

Current liabilites comprises of accounts payable $14000 and notes payable due within one year $24000(notes payable due beyond one year is considered a long term liabilty). So the sum total is $38000.

Now applying the formula of working capital(Current asset-Current Liabilities):
$76000-$38000=$38000

Positive working capital means that the company is able to pay off its short-term liabilities.

Answer 3

working capital = current assets - current liabilities
current assets= 25000+27000+24000=76000
current liabilities = 14000+ 24000+12000=60000
working capital = 76000-60000=16000
working capital is positive