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Westerman Inc. started the financial year 2015 with $1968 in current assets and $1348 in current...

Westerman Inc. started the financial year 2015 with $1968 in current assets and $1348 in current liabilities. The corresponding ending figures were $1992 and $1350. What was the change in net working capital during the year 2015?

Select one:

a. $22

b. $24

c. $2

d. $28

Solutions

Expert Solution

Net working capital is a relative measure between current asset and current liabilities. It is difference between current asset and current liabilities of a company. Net working capital gives a measure of the liquidity position and operational efficiency. An increase in net working capital reflect in reduction in cash position and vice versa.           

Given:

Starting at 2015: Current asset= $ 1968, Current liabilities = $ 1348

Net working capital opening = Current Asset – Current Liabilities

                                    = $ 1968 - $ 1348 = $ 620

At end of 2015: Current asset = $ 1992, Current liabilities = $ 1350

Net working capital closing = Current Asset – Current Liabilities

                                                  = $ 1992 - $ 1350 = $ 642

Change in Net working capital = Closing net working capital – Opening Net working capital

                                                       = $ 642 - $ 620 = $ 22

Answer: a. $ 22

jeff jeffy answered 2 years ago
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