The Caraway Seed Company grows heirloom tomatoes and sells thier seeds. The heir
ID: 2710849 • Letter: T
Question
The Caraway Seed Company grows heirloom tomatoes and sells thier seeds. The heirloom tomato plants are preferred by many growers for thier superior flow. At the end of the most recent year the firm had current assets of $49,600, net fixed assets of $248,300, current liabilities of $28,700, and long-term debt of $99,900.
a. Calculate Caraway's stockholders' equity.
b. What is the firm's net working capital?
c. If Caraway's current liabilities consist of $20,700 in accounts payable and $8,000 in short-term debt (notes payable), what is the firm's net working capital?
Explanation / Answer
a.
Assets = Liabilities + Shareholders' equity
From the above equation, we get
49600 + 248300 = 28700 + 99900 + Equity
Therefore Equity = 169,300
b) Net working capital = current assets - current liabilities
Net working capital = 49600 - 28700 = 20,900
c) If current liabilities consist of 8,000 in notes payable, which is not a operating line item on Balance sheet, we have to ignore that from the calculation of net working capital
So Net working capital = 49600 - 28700 - 8000 = 12,900