Here is some financial statement information for a business. Calculate the working capital for the current year.

Prior year Current year
Cash 10,855 11,936
Accounts receivable 5,926 6,723
Short-term investments 9,322 14,265
Inventory 21,305 22,423
Property, plant and equipment 106,564 114,446
Accounts payable 10,000 10,882
Unearned revenue 10,108 12,635
Bank loan, 10 years 50,318 53,593

Question

Here is some financial statement information for a business. Calculate the working capital for the current year.

Prior year	Current year
Cash	 10,855	11,936
Accounts receivable	5,926 	6,723 
Short-term investments	9,322 	14,265 
Inventory	21,305 	22,423 
Property, plant and equipment	106,564 	114,446 
Accounts payable	10,000 	10,882 
Unearned revenue	10,108 	12,635 
Bank loan, 10 years 	50,318 	53,593

BlackTom AI · Accepted Answer

To begin, we identify the definitions involved: working capital = current assets minus current liabilities.

First, list the current assets from the data: cash, accounts receivable, short-term investments, and inventory. Summing these gives:
- Cash: 11,936
- Accounts receivable: 6,723
- Short-term investments: 14,265
- Inventory: 22,423
Total current assets = 11,936 + 6,723 + 14,265 + 22,423 = 55,347.

Next, determine the current liabilities: accounts payable and unearned revenue are typically considered current liabilities. The amounts are:
- Accounts payable: 10,882
- Unearned revenue: 12,635
Total current liabilities = 10,882 + 12,635 = 23,517.

Now compute working capital by subtracting current liabilities from current assets:
55,347 (current assets) − 23,517 (current liabilities) = 31,830.

Thus, the working capital for the current year is 31,830. If you compare with alternative breakdowns, note that the long-term bank loan (10 years) and property, plant, and equipment are not included in current assets or current liabilities, so they do not affect the working capital calculation here.

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