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    working capital for Apex Printing

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    Mary sees you pass by her office the next day and waves you in to talk.

    "Good morning," she says. "I need you to write some content for a report I'm preparing. I could do it myself, but I can't get to it before I have to leave town on business. This piece of the report is fairly straightforward. Given your expertise, I think you'll do a good job with it."

    "Sure," you say. "Whatever I can do to help."

    "Okay, good," she says. "This report is for potential investors. The section I want you to write is about working capital. I'd like you to explain what working capital is and provide an equation that can be used to compute it. Then follow that up by computing the working capital for Apex, using the same balance sheets you have for the PowerPoint presentation you're working on. Make sure to describe the trend."

    "I think I understand what you want," you say. "It will be important to show whether the trend is improving, deteriorating, or moderating. Obviously, we want to demonstrate our need for external capital. However, another objective is to make the investor aware of the components of working capital, and how the components have changed over the last 2 years. Right?"

    "Exactly," she says. "Let me know if you have any questions."

    For this discussion, complete the following based on your conversation with Mary:

    Explain what working capital is.
    Provide an equation that can be used to compute it.
    Follow that up by computing the working capital for Apex, using these balance sheets.

    Apex Printing
    Balance Sheets
    As of December 31, 2013 and 2012
    000$ 000$
    Assets 2013 2012
    Cash 6,000 5,700
    Accounts Receivable 2,350 2,300
    Inventory 12,100 6,500
    Total Current Assets 20,450 14,500
    Land 25,000 20,000
    Building & Equipment 300,000 300,000
    Less: Accumulated Depreciation - Building & Equipment (187,850) (160,000)
    Total Long Term Assets 137,150 160,000
    Total Assets 157,600 174,500

    Liabilities and Stockholders' Equity
    Accounts Payable 4,600 3,500
    Salaries Payable 0 2,100
    Interest Payable 1,500 0
    Short Term Notes Payable 12,000 0
    Taxes Payable 0 5,600
    Total Current Liabilities 18,100 11,200
    Mortgate Payable 54,950 100,000
    Total Long Term Liabilities 54,950 100,000
    Common Stock 60,000 60,000
    Retained Earnings 24,550 3,300
    Total Stockholders' Equity 84,550 63,300
    Total Liabilities and Stockholders' Equity 157,600 174,500

    Apex Printing
    Income Statements
    For the Periods Ended December 31, 2013 and 2012 000 $ 000$
    2013 2012
    Revenue: 450,000 475,000
    Less: Cost of Goods Sold (324,300) (374,500)
    Less: Depreciation Expense (27,850) (26,000)
    Gross Margin 97,850 74,500
    Selling, General & Administrative Expenses (29,100) (32,000)
    Income Before Interest & Taxes 68,750 42,500
    Interest Expense (7,500) (6,000)
    Income Before Taxes 61,250 36,500
    Income Taxes (35,000) (30,000)
    Net Income 26,250 6,500

    Apex Printing
    Statement of Cash Flows
    For the Period Ended December 31, 2013
    000$
    Cash Flows from Operating Activities:
    Net Income 26,250
    Adjustments to reconcile net income to net cash provided by
    operating activities
    Depreciation Expense 27,850
    Increase in accounts receivable (50)
    Increase in inventory (5,600)
    Decrease in salaries payable (2,100)
    Increase in interest payable 1,500
    Decrease in taxes payable (5,600)
    Increase in Short Term notes Payable 12,000
    Increase in accounts payable 1,100

    Net Cash Flow from Operating Activities
    55,350
    Cash Flows from Investing Activities:
    Cash paid to purchase land (5,000)
    Net Cash Flow from Investing Activities
    (5,000)
    Cash Flows From Financing Activities:
    Cash paid for mortgage (45,050)
    Cash paid for dividends (5,000)
    Net Cash Flow from Financing Activities
    (50,050)
    Net Increase in Cash
    300
    Plus: Cash Balance at December 31, 2012
    5,700
    Cash Balance at December 31, 2013
    6,000

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    https://brainmass.com/business/working-capital-management/working-capital-apex-printing-536946

    Solution Preview

    working capital
    Mary sees you pass by her office the next day and waves you in to talk.

    "Good morning," she says. "I need you to write some content for a report I'm preparing. I could do it myself, but I can't get to it before I have to leave town on business. This piece of the report is fairly straightforward. Given your expertise, I think you'll do a good job with it."

    "Sure," you say. "Whatever I can do to help."

    "Okay, good," she says. "This report is for potential investors. The section I want you to write is about working capital. I'd like you to explain what working capital is and provide an equation that can be used to compute it. Then follow that up by computing the ...

    Solution Summary

    The working capital for Apex printing are examined.

    $2.19