Question

"The 2017 balance sheet of Dream, Inc., showed current assets of $3,190 and current liabilities of $1,480. The 2018 balance sheet showed current assets of $3,240 and current liabilities of $1,670."What was the company's 2018 change in net working capital, or NWC?

Answer 1

Answer:

This problem requires us to calculate Dream Inc change in net working capital, or NWC. The woking capital is the company ability to pay its short term liabilities. In other words it shows how liquid company is.

Working capital is difference between current asset and current liability.

2017 NWC = 3,190 - 1,430 = 1,710 -A

2018 NWC = 3,240 - 1,670 = 1,570-B

Change in NWC = A-B = $ 140

The company net working capital has decreased by 140 dollars.