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Net Working Capital Problem

Mr. Rodney's region reported to headquarters that its NWC was $1547 at the end of 2000, $633 at the end of 2001, and $1294 at the end of 2002. How much was its NWC investment?

Please use this NWC formula:

NWC=Investment + Accounts Receivable - Accounts Payable
change NWC=change Investment + change Accounts Receivable - change Accounts Payable.

Ans: $(914.00)


Solution Preview

First and foremost,
NWC = Current Assests - Current Liablities
NWC represents the net money invested by the company in Working Capital (as opposed to Fixed Capital).
Current Assets = Inventory + Account Receivable (+ a few more ...