Your firm has been in business for two years. In its first year, the firm ended with $227,000 of current assets, long-term assets of $143,000, $70,000 in surplus cash, current liabilities of $52,000, and long-term assets of $68,000. At the end of the second year, the firm had current assets of $279,000, long-term assets of $195,000, surplus cash of $90,000, current liabilities of $62,000, and long-term assets of $78,000. What is your firm's change in net operating working capital?
A)$22,000
B)$62,000
C)$42,000
D)$32,000

Question

Quizplus · Accepted Answer

The change in net operating working capital is calculated by subtracting the net operating working capital at the beginning of the period from the net operating working capital at the end of the period. The net operating working capital at the beginning of the period is calculated by subtracting the current liabilities from the current assets, which is $227,000 - $52,000 = $175,000. The net operating working capital at the end of the period is calculated by subtracting the current liabilities from the current assets, which is $279,000 - $62,000 = $217,000. Therefore, the change in net operating working capital is $217,000 - $175,000 = $42,000.

Your Firm Has Been in Business for Two Years