Valero Energy's balance sheet showed total current assets of $3,000, all of which were required in operations (i.e., no excess cash). Its current liabilities consisted of $885 of accounts payable, $600 of 6% short-term notes payable to the bank, and $250 of accrued wages and taxes. What was its net operating working capital (NOWC)?
Valero Energy's balance sheet showed total current assets of $3,000, all of which were required in operations (i.e., no excess cash). Its current liabilities consisted of $885 of accounts payable, $600 of 6% short-term notes payable to the bank, and $250 of accrued wages and taxes. What was its net operating working capital (NOWC)?
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:Valero Energy's balance sheet showed total current assets of $3,000, all of which were required in
operations (i.e., no excess cash). Its current liabilities consisted of $885 of accounts payable, $600 of 6%
short-term notes payable to the bank, and $250 of accrued wages and taxes. What was its net operating
working capital (NOWC)?
Your answer should be between 1672 and 2027, rounded to even dollars (although decimal places are okay),
with no special characters.
Expert Solution
Net operating working capital:
Net operating working capital is the difference between a company's current assets (excluding cash and cash equivalents) and its current liabilities and represents the funds that are tied up in the company's daily operations. It measures a company's ability to meet its short-term obligations and is an important indicator of financial health and stability. A positive net operating working capital means the company has enough liquid assets to pay off its short-term debts, while a negative value signals a potential risk of default.
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