Consider the information below from a firm's balance sheet for 2013 and 2014
Current Assets 2014 2013 Change
Cash and Equivalents $1,561 $1,800 -$ 239
Short-Term Investments $1,052 $3,010 -$1,958
Accounts Receivable $3,616 $3,129 $ 487
Inventories $1,816 $1,543 $ 273
Other Current Assets $ 707 $ 601 $ 106
Total Current Assets $8,752 $10,083 -$1,331
Current Liabilities
Accounts Payable $5,173 $5,111 $ 62
Short-Term Debt $ 288 $ 277 $ 11
Other Current Liabilities $1,401 $1,098 $303
Total Current Liabilities $6,862 $6,486 $ 376
What is the Net Working Capital for 2014? What is it for 2013? What is the Change in Net Working Capital (NWC)? Assuming the Operating Cash Flows (OCF) are $7,155 and the Net Capital Spending (NCS) is $2,372, what is the Cash Flow from Assets?
What will be an ideal response?
Answer:
Net Working Capital for 2014 is $8,752 - $6,862 = $1,890
Net Working Capital for 2013 is $10,083 - $6,486 = $3,597
Decrease in Net Working Capital (NWC) = $1,890 - $3,597= -$1,707
Assuming that Operating Cash Flows (OCF) are $7,155, Net Capital Spending (NCS) is $2,372, and Decrease in Net Working Capital is -$1,707, we get:
Cash Flow from Assets = OCF - NCS — Decrease in NWC = $7,155 - $2,372 - (-$1,707) = $6,490.
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