**Question 11:**Ariel Corporation reports the following year-end balance sheet data. The company's working capital equals:**Assets:**- Cash: $40,000- Accounts receivable: $55,000- Inventory: $60,000- Equipment: $145,000**Total Assets:** $300,000**Liabilities and Equity:**- Current liabilities: $75,000- Long-term liabilities: $35,000- Common stock: $100,000- Retained earnings: $90,000**Total Liabilities and Equity:** $300,000**Options:**- (A) $80,000- (B) $155,000- (C) $75,000- (D) $300,000- (E) $190,000**Key Concept: Working Capital**Working capital is calculated as the difference between current assets and current liabilities. Current assets include cash, accounts receivable, and inventory:- **Current Assets:** - Cash: $40,000 - Accounts receivable: $55,000 - Inventory: $60,000Total Current Assets = $40,000 + $55,000 + $60,000 = $155,000- **Current Liabilities:** $75,000**Working Capital = Total Current Assets - Current Liabilities****Working Capital = $155,000 - $75,000 = $80,000**The correct option is (A) $80,000.

Working capital is the difference between a company's current assets (e.g., cash, inventory) and…

11. Ariel Corporation reports the following year-end balance sheet data. The company's working capital equals: Cash Accounts receivable Inventory Equipment Total assets (A) $80,000 (B) $155,000 (C) $75,000 (D) $300,000 (E) $190,000 $40,000 55,000 60,000 Current liabilities Long-term liabilities Common stock 145,000 Retained earnings $ 300,000 Total liabilities and equity $ 75,000 35,000 100,000 90,000 $ 300,000

11. Ariel Corporation reports the following year-end balance sheet data. The company's working capital equals: Cash Accounts receivable Inventory Equipment Total assets (A) $80,000 (B) $155,000 (C) $75,000 (D) $300,000 (E) $190,000 $40,000 55,000 60,000 Current liabilities Long-term liabilities Common stock 145,000 Retained earnings $ 300,000 Total liabilities and equity $ 75,000 35,000 100,000 90,000 $ 300,000

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 19P

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