Asked by LaQuesha Jewell on May 09, 2024
Verified
A firm has current assets of $10,000 and current liabilities of $6,000. Cash and marketable securities total $4,000, the balance in accounts receivable is $2,000, and the book value of inventory is $4,000. The firm's net working capital is:
A) $2,000.
B) $4,000.
C) $6,000.
D) $9,000.
E) None of the above
Net Working Capital
The disparity between an organization's immediate assets and its short-term obligations.
Marketable Securities
Liquid financial instruments that can be quickly converted into cash at their fair market value.
Accounts Receivable
Funds that clients or customers owe to a business for products or services they have received but have not yet paid for.
- Determine the net working capital and its relevance.
Verified Answer
CV
Christopher ValadezMay 10, 2024
Final Answer :
B
Explanation :
Net working capital is calculated as current assets minus current liabilities. Here, it is $10,000 - $6,000 = $4,000.
Learning Objectives
- Determine the net working capital and its relevance.