PLEASE help me understand a finance formula problem......Thank you in advance

[bulldog222]

I have the following information on a company:

Net Worth	17,800
Long term debt	6900
Net working capital (excluding cash)	1,600
Fixed assets	21,300
Current liabilities (CL)	2,575

I am solving for the question : how much cash does the company have....and
if current liabilities are 2575, what are the current assets...
so far, I have managed to get myself completely confused,,,,the work I have completed so far, (from countless formula searchs on line) is

Assets- Liabilities	19,550		(21300. + 825. -2575._ = 19550.
Liabilities = CL + Long term debt	9,475		(2575.+ 6900)=9475
Assets	27,275		17800 +19550.=27275 =NET WORTH + LIABILITIES
Assets= CA + Fixed assets	22,125
	5975		27275 - 21300.=5975
Net working capital (excluding cash) = CA - CL- cash
Cash	1,800
Current Assets	825
Cash = $1800
Current Assets = $825.	Current Assets = Net Working Capital (Including Cash) - Current Liabilities
I no longer have faith in my answer of Cash =1800 and CA = 825.....because I don't remember where or how or why I came up with the answers, specifically, the # 5975, which I THOUGHT was the CA answer, but I know is wrong simple because my teacher marked it wrong.. Any guidance is so very much appreciated... I've been working on this all weekend....	Net Working Capital (Including Cash) = Net Working Capital (Excluding Cash) + Cash

 

[Ishuda]

I have the following information on a company:

Net Worth	17,800
Long term debt	6900
Net working capital (excluding cash)	1,600
Fixed assets	21,300
Current liabilities (CL)	2,575

I am solving for the question : how much cash does the company have....and
if current liabilities are 2575, what are the current assets...
so far, I have managed to get myself completely confused,,,,the work I have completed so far, (from countless formula searchs on line) is ...

If this is all the information given, some assumptions will have to be made. One is that both the Long Term debt and Current Liabilities are outside liabilities, i.e. they are not something internal to the company. Next you can either group other assets (and liabilities) other than the given assets of working capital, Fixed assets, and cash (or given liabilities of Long term debt and Current Liabilities) into a single group or just ignore them.

For example
Assets = 1600 + 21300 + Cash + OA = 22900 + Cash + OA
or just drop the OA (assume it is zero).

Note that Current liabilities generally doesn't include Long term debt so you computations for Liabilities are incorrect.

 

[Ishuda]

       ASSETS              LIABILITIES
Current    4,175       Current     2,575 **
Cash       1,800       Long term   6,900
           =====                   =====
           5,975                   9,475
Fixed     21,300       Net worth  17,800
          ======                  ======
          27,275                  27,275

** 4,175 - 2,575 = 1,600 (working capital)

Compliments of the "Denis BSers Co. Ltd"

Why would you not include Cash as part of overall working capital to get 3400 as working capital?

 

[bulldog222]

THANK YOU....but 1 point of clarity....PLEASE

Denis, Thank you so much, I have been working on this ALL weekend...my head is spinning...
my instructor gave the the following direction:

Current Assets = Net Working Capital (Including Cash) - Current Liabilities... which equals: 1600. (NWC) + 1800.(Cash)= 3400 - 2575 (CL) which equal CA as 825....???
Net Working Capital (Including Cash) = Net Working Capital (Excluding Cash) + Cash... and I don't have a clue what this formula is even relevant too..... How I got cash was: TOTAL ASSETS OF 27275 BY (NW 17800 + LIABILITIES 9475. )- FIXED ASSETS 21300 +CA 825 = 5975...AND 5975-CL 2575 - NWC 1600= CASH 1800

I am solving for cash and current assets , I got all the same numbers as you EXCEPT current assets of 4175...what am I missing...PLEASE AND THANKS
I got c

       ASSETS              LIABILITIES
Current    4,175       Current     2,575 **
Cash       1,800       Long term   6,900
           =====                   =====
           5,975                   9,475
Fixed     21,300       Net worth  17,800
          ======                  ======
          27,275                  27,275

** 4,175 - 2,575 = 1,600 (working capital)

Compliments of the "Denis BSers Co. Ltd"

 

[bulldog222]

Why would you not include Cash as part of overall working capital to get 3400 as working capital?

I don't know, the instructions were NWC as 1600 without cash and I had to solve for cash... which, when I did... I got NWC 1600. plus cash 1800 = 3400.....
and to solve for CA I used that 3400 - CL 2575 = 825...
does that sound right?...
if so AWESOME... because the more I work this equation, the more my head is stating to spin...lol, but really...

 

[bulldog222]

Because it is a GIVEN that working capital = 1600,
plus working capital defined as current assets less current liabilities...
so I cooked the books accordingly :cool:

.... so, then what is the formula to solve for cash? ....please and thank you...

 

[Ishuda]

Because it is a GIVEN that working capital = 1600,
plus working capital defined as current assets less current liabilities...
so I cooked the books accordingly :cool:

But that was "Net working capital (excluding cash)"

This is what I have thought put in a more succinct way "Current assets include stocks, money owed by debtors -- accounts receivable -- cash and cash equivalents, and other current assets. Current liabilities include all short-term borrowings, or company debt due in the next year. ...", see
http://wiki.fool.com/What_Is_Net_Working_Capital_and_How_Is_It_Different_From_Gross_Working_Capital?
for example. That is, Net Working capital should include cash.

 

[Ishuda]

I have the following information on a company:

Net Worth	17,800
Long term debt	6900
Net working capital (excluding cash)	1,600
Fixed assets	21,300
Current liabilities (CL)	2,575

I am solving for the question : how much cash does the company have....and
if current liabilities are 2575, what are the current assets...
so far, I have managed to get myself completely confused,,,,the work I have completed so far, (from countless formula searchs on line) is ...

The way I would do it, assuming no other assets nor liabilities other than given,
Assets = 1600 + Cash + 21300 = 22900 + Cash
Liabilities = 2,575 + 6900 = 9475

Net Worth = Assets - Liabilities = 13425 + Cash = 17800
or
Cash = 17800 - 13425 = 4375

Net Working Capital = 1600 + Cash = 5975

Current Assets = Net Working Capital - Current Liabilities = 3400