In: Finance
BALANCE SHEETS:
Assets:
Cash 120,000 160,000
Accounts Receivable 520,000 620,000
Inventory 305,000 290,000
Fixed Assets, net 410,000 510,000
Total Assets 1,355,000 1,580,000
Liabilities and Equity:
Accounts Payable 350,000 $375,000
Long-term Debt 500,000 625,000
Common Stock 50,000 75,000
Retained Earnings 455,000 505,000
Total Liabilities and Equity 1,355,000 1,580,000
INCOME STATEMENT:
Revenue 3,500,000
Cost of Goods Sold 2,275,000
General and Administrative 515,000
Depreciation Expense 120,000
Earnings Before Interest and Taxes 590,000
Interest Expense 40,000
Pretax Net Income 550,000
Income Taxes 167,000
Net Income 383,000
Formula to calculate investment in net working capital | ||||||
Investment in net working capital = Net working capital of 2017 - Net working capital of 2016 | ||||||
Formula to calculate net working capital | ||||||
Net working capital = Current assets - Current Liabilities | ||||||
Calculation of net working capital in 2017 | ||||||
Net working capital = Cash + Accounts receivable + Inventory - Accounts payable | ||||||
Net working capital = 160,000 + 620,000 + 290,000 - 375,000 | ||||||
Net working capital (2016) | $695,000 | |||||
Calculation of net working capital in 2016 | ||||||
Net working capital = Cash + Accounts receivable + Inventory - Accounts payable | ||||||
Net working capital = 120,000 + 520,000 + 305,000 - 350,000 | ||||||
Net working capital (2017) | $595,000 | |||||
Calculation of investment in net working capital | ||||||
Investment in net working capital = 695,000 - 595,000 | ||||||
Investment in net working capital | $100,000 | |||||
Gannon's investment in net working capital for 2017 is $100,000 |