Boyes Beach Wear is adding a new product to its sales lineup. Initially, the firm will stock $29,000 of inventory, which will be purchased on 30-days credit from its supplier. The firm will also invest $23,000 in accounts receivable and $87,000 in equipment. What amount should be included in the initial costs for net working capital?
Solution
We have:
Inventory = 29000
Accounts payables=29000
Accounts receivables= 23000
Net working capital = current assets – current liabilities
= (Inventory + Accounts receivables) – (Accounts payables)
= 29000+23000-29000
= 23,000
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Boyes Beach Wear is adding a new product to its sales lineup- Initiall.docx
1. Boyes Beach Wear is adding a new product to its sales lineup. Initially, the firm will stock
$29,000 of inventory, which will be purchased on 30-days credit from its supplier. The firm will
also invest $23,000 in accounts receivable and $87,000 in equipment. What amount should be
included in the initial costs for net working capital?
Solution
We have:
Inventory = 29000
Accounts payables=29000
Accounts receivables= 23000
Net working capital = current assets – current liabilities
= (Inventory + Accounts receivables) – (Accounts payables)
= 29000+23000-29000
= 23,000
