Question

Create a mock balance sheet. Include numbers for each component (e.g. Current assets are 2,030, etc.). What areas within the balance sheet are involved networking capital? What is the formula for net working capital and the answer in your example?

Answer 1

XYZ Company
Balance Sheet as at December 31, 2018
Assets
Current assets
Cash	700,000.00
Marketable securities	1,300,000.00
Accounts receivable (net)	950,000.00
Inventories	850,000.00
Prepaid expenses	250,000.00
Total current assets	4,050,000.00
Long-term investments	2,000,000.00
Property, plant, and equipment (net)	4,680,000.00
Total assets	10,730,000.00
Liabilities
Current liabilities
Accounts Payables	1,000,000.00
Salaries Payable	2,000,000.00
Long-term liabilities
Mortgage note payable	500,000.00
Bonds payable	1,330,000.00
Total long-term liabilities	1,830,000.00
Total liabilities	4,830,000.00
Stockholders' Equity
Preferred Stock	750,000.00
Common stock,	850,000.00
Retained earnings	4,300,000.00
Total stockholders' equity	5,900,000.00
Total liabilities and stockholders' equity	10,730,000.00

Net Working Capital = Total Current Assets – Total Current Liabilities

= $4,050,000.00 – [ $10,00,000.00 + 20,00,000.00 ]

= $4,050,000.00 - $30,50,000.00

= $10,50,000.00

“ Net Working Capital = $10,50,000.00 “