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)?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter11: The Statement Of Cash Flows
Section: Chapter Questions
Problem 11MCQ: Chasse Building Supply Inc. reported net cash provided by operating activities of $243,000, capital...
Related questions
Question
6
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.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning