The Caraway Seed Company grows heirloom tomatoes and sells their seeds. The heir
ID: 2810230 • Letter: T
Question
The Caraway Seed Company grows heirloom tomatoes and sells their seeds. The heirloom tomato plants are preferred by many growers for their superior flavor. At the end of the most recent year the firm had current assets of $51,700, net fixed assets of $250,400, current liabilities of $28,200, and long-term debt of $100,100.
a. Calculate Caraway's stockholders' equity.
b. What is the firm's net working capital?
c. If Caraway's current liabilities consist of $ 20,600 in accounts payable and $ 7,600 in short-term debt (notes payable), what is the firm's net working capital?
a. Calculate Caraway's stockholders' equity.
Caraway's stockholders' equity is $___. (Round to the nearest dollar.)
Networking capital $____ (round)
Explanation / Answer
Solution-
Current assets- $51,700
Net fixed assets - $2,50,400
Current liabilities - $28,200
Long term debt - $100,100
Total assets = current assets + net fixed assets
Total assets =$51,700+$2,50,400=$3,02,100
Total liabilities ( excludes shareholders equity) = current liabilities + long term debt
Total liabilities ( excludes shareholders Equity) = $28,200+$1,00,100=$1,28,300
a) Shareholders equity= Assets - liabilities
Shareholders equity = $3,02,100- $1,28,300=$1,73,800
b) Net working capital = Current assets - Current liabilities
Net working capital =$51,700- $28,200=$23,500
c) Net working capital would remain same as calculated in part b i.e. $23,500 because current liabilities consist of accounts payable of $20,600 and notes payable of $7600 and both are classified under current liabilities i.e. payable within one year of balance sheet . Hence no change in net working capital.