Question

Refer to the following selected financial information from McCormik, LLC. Compute the company's working capital for Year 2.

Year 2 Year 1
Cash $38,800 $33,550
Short-term investments 103,000 66,500
Accounts receivable, net 92,000 86,000
Merchandise inventory 127,500 131,500
Prepaid expenses 13,400 11,000
Plant assets 394,500 344,500
Accounts payable 106,900 114,300
Net sales 717,500 682,500
Cost of goods sold 396,500 381,500

Answer 1

Answer:

$267,800

Explanation:

Working capital  = Current Assets - Current Liabilities

where for Year 2,

Current Assets = $38,800 + $103,000 + $92,000 + $127,500 + $13,400

                         = $374,700

and

Current Liabilities = $106,900

therefore,

Working capital  = $267,800

thus,

The company's working capital for Year 2 is $267,800.