If a firm has $100 in inventories, a current ratio equal to 1.2, and a quick ratio equal to 1.1, what is the firm's net working capital?
Answers
Explanation:
each firm will face two market demand curves for its product. ... If the oligopolist increases its price above the equilibrium price P, it is assumed that the other oligopolists in the market will not follow with price increases of their own.
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Net working capital = $200
Explanation:
Given:
Inventory = $100
Current ratio = 1.2
Quick ratio = 1.1
Computation:
Current ratio = Current Assets / Current liabilities
1.2 = Current Assets / Current liabilities
Current Assets = 1.2 Current liabilities
Quick ratio = (Current Assets - Inventory) / Current liabilities
1.1 = (Current Assets -$100) / Current liabilities
1.1 Current liabilities = 1.2 Current liabilities - $100
$100 = 0.1 Current liabilities
Current liabilities = $1,000
Current Assets = 1.2 ($1,000)
Current Assets = $1,200
Net working capital = Current Assets - Current liabilities
Net working capital = $1,200 - $1,000
Net working capital = $200
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