Refer to the Following Selected Financial Information from McCormik, LLC

question 210

Multiple Choice

Refer to the following selected financial information from McCormik, LLC. Compute the company's working capital for Year 2. $$\begin{array} { | l | r | r | } \hline & { \text { Year 2 } } & { \text { Year 1 } } \\\hline \text { Cash } & \$ 37,500 & 3 6 , 8 5 0 \\\hline \text { Short-term investments } & 90,000 & 90,000 \\\hline \text { Accounts receivable, net } & 85,500 & 86,250 \\\hline \text { Merchandise inventory } & 121,000 & 117,000 \\\hline \text { Prepaid expenses } & 12,100 & 13,500 \\\hline \text { Plant assets } & 388,000 & 392,000 \\\hline \text { Accounts payable } & 113,400 & 111.750 \\\hline \text { Net sales } & 711,000 & 706,000 \\\hline \text { Cost of goods sold } & 390,000 & 385,500 \\\hline\end{array}$$

• A) $111,700.
• B) $220,600.
• C) $147,200.
• D) $142,700.
• E) $232,700.

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Definitions:

Cash Inflows

The total amount of money received by a company during a given period from various sources, including operations, investment, and financing activities.

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment by calculating the total present value of its expected future cash flows minus the initial investment cost.

Rate Of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's initial cost.

Present Value

The present worth of a future amount of money or series of cash flows, calculated using a given interest rate.