Swinnerton Clothing Company's balance sheet showed total current assets of $2,250, all of which were required in operations

Finance Sep 07, 2020

Swinnerton Clothing Company's balance sheet showed total current assets of $2,250, all of which were required in operations. Its current liabilities consisted of $575 of accounts payable, $300 of 6% short-term notes payable to the bank, and $145 of accrued wages and taxes. What was its net operating working capital?

Expert Solution

Computation of Net operating working capital:

Net operating working capital = Current assets - Current liabilities

= Current assets - (Accounts payable + Accrued wages and taxes)

= $2,250 - ($575 + $145)

= $2,250 - $720

Net operating working capital = $1,530

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