Question

The table below contains data on Fincorp Inc. The balance sheet items correspond to values at year-end 2015 and 2016, while the income statement items correspond to revenues or expenses during the year ending in either 2015 or 2016. All values are in thousands of dollars.

	2015			2016
Revenue	$	4,000		$	4,100
Cost of goods sold		1,600			1,700
Depreciation		500			520
Inventories		300			350
Administrative expenses		500			550
Interest expense		150			150
Federal and state taxes*		400			420
Accounts payable		300			350
Accounts receivable		400			450
Net fixed assets†		5,000			5,800
Long-term debt		2,000			2,400
Notes payable		1,000			600
Dividends paid		410			410
Cash and marketable securities		800			300

* Taxes are paid in their entirety in the year that the tax obligation is incurred.

^† Net fixed assets are fixed assets net of accumulated depreciation since the asset was installed.

What was the change in net working capital during the year? (Enter your answer in thousands of dollars.)

Answer 1

2015:

Current Assets = Cash and Marketable Securities + Accounts Receivable + Inventories
Current Assets = $800 + $400 + $300
Current Assets = $1,500

Current Liabilities = Accounts Payable + Notes Payable
Current Liabilities = $300 + $1,000
Current Liabilities = $1,300

Net Working Capital = Current Assets - Current Liabilities
Net Working Capital = $1,500 - $1,300
Net Working Capital = $200

2016:

Current Assets = Cash and Marketable Securities + Accounts Receivable + Inventories
Current Assets = $300 + $450 + $350
Current Assets = $1,100

Current Liabilities = Accounts Payable + Notes Payable
Current Liabilities = $350 + $600
Current Liabilities = $950

Net Working Capital = Current Assets - Current Liabilities
Net Working Capital = $1,100 - $950
Net Working Capital = $150

Change in Net Working Capital = Net Working Capital, 2016 - Net Working Capital, 2015
Change in Net Working Capital = $150 - $200
Change in Net Working Capital = -$50