A firm’s 2016 balance sheet showed current assets of $1,700 and current liabilities of $800. Its...

A firm’s 2016 balance sheet showed current assets of $1,700 and current liabilities of $800. Its 2017 balance sheet showed current assets of $2,500 and current liabilities of $4,000. What was the firm’s 2017 increase in net working capital?

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Expert Solution

Net working capital	=	Current assets	-	Current liabilities

Net working capital of 2017:

Current assets		$ 2,500

Current liabilities		$ 4,000

Net Working Capital		$ -1,500

Net working capital of 2016:

Current assets		$ 1,700

Current liabilities		$ 800

Net Working Capital		$ 900

Firm's 2017 increase in net working capital		=	Net working capital in 2017	-	Net working capital in 2016
		=	$ -1,500	-	$ 900
		=	$ -2,400

jeff jeffy answered 1 month ago

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