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Carl's Bail Bonds: Calculate change in net working capital and net cash flow.

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Please help with the following problem regarding working capital management.

Last year, Carl's Bail Bonds reported sales of $58,200 and costs of $22,700. The following information was also reported for the same period:

Beginning Accounts Receivable: $24,880
Ending Accounts Receivable: $21,520
Beginning Inventory: 4,270
Ending Inventory: 6,512
Beginning Accts Payable: 40,680
Ending Accts Payable: 44,540

Based on this information, what was Carl's change in net working capital for last year? What was the net cash flow?

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Solution Summary

The solution walks through the methodology of computing the change in working capital and cash flows. It is mostly narrative explaining the concepts, but the amounts for the problem are also computed. Step by step calculations are given.

Solution Preview

Net working capital (NWC) is defined as the difference between current assets and current liabilities. Change in NWC, therefore, is NWC2 - NWC1.

In this problem, the only information we have is regarding accounts receivable, inventory, and ...

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