Asked by Nayely Quintero on May 31, 2024
Verified
McRae Corporation's total current assets are $380,000, its noncurrent assets are $500,000, its total current liabilities are $340,000, its long-term liabilities are $250,000, and its stockholders' equity is $290,000. Working capital is:
A) $380,000
B) $40,000
C) $250,000
D) $290,000
Noncurrent Assets
Long-term assets that are not expected to be converted into cash within a year, such as property, plant, and equipment.
Stockholders' Equity
The ownership interest of shareholders in a corporation, calculated as total assets minus total liabilities.
- Compute working capital and comprehend its importance.
Verified Answer
KK
Kaycee KinnardJun 02, 2024
Final Answer :
B
Explanation :
Working capital is calculated as current assets minus current liabilities. Therefore, working capital for McRae Corporation is:
$380,000 (total current assets) - $340,000 (total current liabilities) = $40,000.
Choice B is the correct answer.
$380,000 (total current assets) - $340,000 (total current liabilities) = $40,000.
Choice B is the correct answer.
Learning Objectives
- Compute working capital and comprehend its importance.