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Q17E

Expert-verified
Horngren'S Financial And Managerial Accounting
Found in: Page 840

Short Answer

Data for Research Enterprises follows:

2019

2018

2017

Total current assets

$490,000

$320,000

$230,000

Total current liabilities

$235,000

$160,000

$115,000

Compute the dollar amount of change and the percentage of change in Research Enterprises’ working capital each year during 2019 and 2018. What do the calculated changes indicate?

The change in working capital in 2019 is $95,000 and in 2018 is $45,000. The percentage change in working capital in 2019 is 59.38% and in 2018 39.13%

See the step by step solution

Step by Step Solution

Step 1 Computation of working capital

Step 2 Computation of changes in working capital

Step 3 Computation of percentage change in working capital

Step 4 Indication of the calculations.

The change in working capital is increasing which means the company is expanding their operations so the working capital of the company is increasing.

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