The 2017 balance sheet of Dream, Inc., showed current assets of $1,320 and current liabilities of $840. The 2018 balance sheet showed current assets of $1,760 and current liabilities of $1,140. What was the company's 2018 change in net working capital, or NWC? O A. $740 OB. $-740 O C. $114 D. $140
The 2017 balance sheet of Dream, Inc., showed current assets of $1,320 and current liabilities of $840. The 2018 balance sheet showed current assets of $1,760 and current liabilities of $1,140. What was the company's 2018 change in net working capital, or NWC? O A. $740 OB. $-740 O C. $114 D. $140
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
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The 2017 balance sheet of Dream, Inc., showed current assets of $1,320 and current liabilities of $840. The 2018 balance sheet showed current assets of $1,760 and current liabilities of $1,140. What was the company’s 2018 change in net working capital, or NWC?
**Options:**
- A. $740
- B. -$740
- C. $114
- D. $140
The correct answer is **D. $140**.
**Explanation:**
Net Working Capital (NWC) is calculated as the difference between current assets and current liabilities.
For 2017:
- NWC = Current Assets (2017) - Current Liabilities (2017)
- NWC = $1,320 - $840 = $480
For 2018:
- NWC = Current Assets (2018) - Current Liabilities (2018)
- NWC = $1,760 - $1,140 = $620
Change in NWC from 2017 to 2018:
- Change in NWC = NWC (2018) - NWC (2017)
- Change in NWC = $620 - $480 = $140
Thus, the company's change in net working capital for 2018 is $140.
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