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The Caraway Seed Company grows heirloom tomatoes and sells their seeds
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, 200, net fixed assets of $ 249, 300?, current liabilities of $ 30,700?, and? long-term debt of $ 99, 100.
a) Calculate? Caraway's stockholders' equity.
b) What is the? firm's net working? capital?
c)If? Caraway's current liabilities consist of $ 19, 400 in accounts payable and $ 11, 300 in? short-term debt? (notes payable), what is the? firm's net working? capital?
Expert Solution
a) Computation of the stockholder's equity:-
Total assets = Net fixed assets + Current assets
= $249,300 + $50,200
= $299,500
Total assets = Stockholder's equity + Long term debt + Current liabilities
$299,500 = Stockholder's equity + $99,100 + $30,700
Stockholder's equity = $299,500 - $99,100 - $30,700
= $169,700
b) Computation of the net working capital:-
Net working capital = Current assets - Current liabilities
= $50,200 - 30,700
= $19,500
c) Computation of the net working capital:-
Current liabilities = Accounts payable + Short term debt
= $19,400 + $11,300
= $30,700
Net working capital = Current assets - Current liabilities
= $50,200 - 30,700
= $19,500
Net working capital would remain same as calculated in part b) $19,500 because current liabilities consist of accounts payable of $19,400 and short term debt of $11,300 and both are classified under current liabilities. So, no change in net working capital.
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