Team Sports Industries Has a Cash Balance of $60,000; Accounts

question 72

Multiple Choice

Team Sports Industries has a cash balance of $60,000; accounts payable of $40,000; inventory of $100,000; accounts receivable of $110,000; notes payable of $80,000; and accrued wages and taxes of $10,000. How much net working capital does the firm need to fund?

• A) $140,000
• B) $130,000
• C) $150,000
• D) $210,000

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Definitions:

Accounting Basis

The method by which revenues and expenses are recorded and recognized in financial statements, such as cash basis or accrual basis.

Rate of Return

The profit or deficit incurred on an investment during a designated time, shown as a fraction of the initial investment amount.

Net Income

The profit of a company after all expenses and taxes have been deducted from revenue.

Accounting Break-even

The point at which total revenues exactly equal total explicit costs, leading to neither a profit nor a loss.