Change in net working capital calculation Samuels Manufacturing is considering the purchase of a new machine to replace one it believes is obsolete. The firm has total current assets of $926,000 and total current liabilities of $645,000. As a result of the proposed replacement, the following changes are anticipated in the levels of the current asset and current liability accounts noted. Account Accruals Marketable securities Inventories Accounts payable Notes payable Accounts receivable Cash Change a. The change in net working capital is S +$44,000 0 - 16,000 +95,000 0 + 149,000 + 11.000 a. Using the information given, calculate any change in net working capital that is expected to result from the proposed replacement action. b. Explain why a change in these current accounts would be relevant in determining the initial cash flow for the (Round to the
Change in net working capital calculation Samuels Manufacturing is considering the purchase of a new machine to replace one it believes is obsolete. The firm has total current assets of $926,000 and total current liabilities of $645,000. As a result of the proposed replacement, the following changes are anticipated in the levels of the current asset and current liability accounts noted. Account Accruals Marketable securities Inventories Accounts payable Notes payable Accounts receivable Cash Change a. The change in net working capital is S +$44,000 0 - 16,000 +95,000 0 + 149,000 + 11.000 a. Using the information given, calculate any change in net working capital that is expected to result from the proposed replacement action. b. Explain why a change in these current accounts would be relevant in determining the initial cash flow for the (Round to the
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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Transcribed Image Text:Change in net working capital calculation Samuels
Manufacturing is considering the purchase of a new
machine to replace one it believes is obsolete. The firm
has total current assets of $926,000 and total current
liabilities of $645,000. As a result of the
proposed replacement, the following changes are
anticipated in the levels of the current asset and current
liability accounts noted.
Account
Accruals
Marketable securities
Inventories
Accounts payable
Notes payable
Accounts receivable
Cash
Change
+$44,000
0
- 16,000
+95,000
0
+ 149,000
+ 11,000
a. Using the information given, calculate any change in net
working capital that is expected to result from the proposed
replacement action.
b. Explain why a change in these current accounts would
be relevant in determining the initial cash flow for the
a. The change in net working capital is $. (Round to the
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