You Are Considering Adding a Microbrewery on to One of Your

question 55

Multiple Choice

You are considering adding a microbrewery on to one of your firm's existing restaurants.This will entail an increase in inventory of $8000,an increase in Accounts payable of $2500,and an increase in property,plant,and equipment of $40,000.All other accounts will remain unchanged.The change in net working capital resulting from the addition of the microbrewery is:

• A)$45,500
• B)$10,500
• C)$6500
• D)$5500

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Definitions:

Net Income

The total earnings of a company after all expenses and taxes have been deducted from total revenue, representing the company's profit.

Dividends Paid

The sum of money paid by a company to its shareholders out of its profits or reserves.

Cash Flow

The aggregate circulation of cash and cash-like resources transitioning into and out of an enterprise.

Creditors

Individuals, banks, or other entities that lend money or extend credit to others, with the expectation of being repaid, often with interest.