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an increase or decrease in NWC

an increase or decrease in NWC

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A project that increased sales was accompanied by $60,000 increase in inventory, a $25,000 increase in trade accounts receivable, and a $18,000 increase in trade accounts payable. Assuming these amounts remain constant, by how much has net working capital changed? Is it an increase or decrease in NWC?

 

my solution = correct?

Net Working Capital          
NWC= (current assets) -(current liabilities)          
NWC= (cash + cash equivalent) +( Marketable Investments)+ (trade accounts receivable) + (inventory) - (trade accounts payable)
          
an increase in NWC leads to a decrease of cash flow
          
           
Inventory $60,000        
Trade accounts receivable $25,000        
  $85,000        
           
trade accounts payable -$18,000        
change in NWC $67,000
increase in NWC
      
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