How do you determine the right amount of working capital a business should have?

Expert Solution

jeff jeffy answered 1 year ago

What is working capital and how do businesses use working capital to manage a business?

Define working capital? How is it measured? Calculate the amount of working capital for Snider Corporation...

Define working capital? How is it measured? Calculate the amount of working capital for Snider Corporation SNIDER CORPORATION Balance Sheet December 31, 2010 Assets Current assets: Cash.............................................................................. $ 50,000 Marketable securities.................................................... 20,000 Accounts receivable (net)............................................. 160,000 Inventory...................................................................... 200,000 Total current assets....................................................... $430,000 Investments................................................................... 60,000 Plant and equipment..................................................... 600,000 Less: Accumulated depreciation.................................. (190,000) Net plant and equipment.............................................. 410,000 Total assets................................................................... $900,000 Liabilities and Stockholders’ Equity Current liabilities Account payable........................................................... $90,000 Notes payable............................................................... 70,000 Accrued taxes............................................................... 10,000 Total current liabilities................................................. 170,000 Long-term liabilities: Bonds payable................................................................. 150,000 Total liabilities.............................................................. $320,000 Stockholders’ equity Preferred stock, $50 per value...................................... 100,000 Common stock, $1...

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What is the amount of working capital

Harding Company Particulars Amount$ Accounts payable 40,000 Accounts Receivable 65,000 Cash 30,000 Accrued Liabilities ...

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Use the following data to determine the total amount of working capital. Alpha Co. Balance Sheet December 31, 2013 Cash $192000 Accounts payable $204000 Accounts receivable 142000 Salaries and wages payable 31500 Inventory 170000 Mortgage payable 244500 Prepaid insurance 90600 Total liabilities $480000 Stock investments 255000 Land 298000 Buildings $323000 Common stock $396100 Less: Accumulated depreciation (65000) 258000 Retained earnings 743500 Trademarks 214000 Total stockholders' equity $1139600 Total assets $1619600 Total liabilities and stockholders' equity $1619600

In an early stage business, what do you believe would be your working capital philosophy; (1)...

In an early stage business, what do you believe would be your working capital philosophy; (1) a liberal credit and collection policy to get as many customers in as possible or (2) a strict credit and collection policy to take very good care of precious working capital? Would your opinion be different if the company was funded out of your pocket or funded by a professional investment firm like Private Equity? In a later stage business, what believe would be...

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