The assets of Dallas & Associates consist entirely of current assets and net pla

Question

The assets of Dallas & Associates consist entirely of current assets and net plant and equipment. The firm has total assets of $2.6 million and net plant and equipment equals $2.2 million. It has notes payable of $140,000, long-term debt of $747,000, and total common equity of $1.45 million. The firm does have accounts payable and accruals on its balance sheet. The firm only finances with debt and common equity, so it has no preferred stock on its balance sheet.

Write out your answers completely. For example, 25 million should be entered as 25,000,000.

Explanation / Answer

Hi,

Please find the answers as follows:

a) Total Liabilities and Equity would be same as total assets. therefore total assets would be 2600000

b) Current Assets = 2600000 -2200000 = 400000

c) Current Liabilties = 2600000 - 747000 - 1450000 = 403000

d) Accounts Payables and Accruals = 403000 - 140000 = 263000

e) Net Working Capital = CA - CL = 400000 - 403000 = -3000

f) Net Operating Working Capital = 400000 - 263000 = 137000

g) Monetary Difference = 137000 - (-3000) = 140000

Thanks.

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