The financial records of Prime Ventures Ltd. show the following balances at the end of its financial year:
| Item | Amount (₦) |
|---|---|
| Authorized Share Capital | 3,000,000 |
| Issued Ordinary Shares | 1,800,000 |
| 8% Long-term Debentures | 600,000 |
| Bank Overdraft | 200,000 |
| Trade Creditors | 150,000 |
| Stock in Trade | 450,000 |
| Trade Debtors | 300,000 |
| Cash at Bank | 200,000 |
Based on the table above, what is the Net Working Capital of Prime Ventures Ltd.?
- ₦600,000Answer
- B₦1,300,000
- C₦0
- D₦2,400,000
Answer
The Net Working Capital of Prime Ventures Ltd. is ₦600,000.
The option stating ₦600,000 is correct because Net Working Capital equals total Current Assets (Stock ₦450,000 + Debtors ₦300,000 + Cash ₦200,000 = ₦950,000) minus total Current Liabilities (Bank Overdraft ₦200,000 + Creditors ₦150,000 = ₦350,000).
Step-by-Step Solution
Key Concept
Net Working Capital Formula