Capital Structure Calculations (Working Capital, Capital Employed, Capital Owned) Practice Questions — JAMB UTME

Question 1Question →

A merchant's business records show capital employed of $\text{₦}2,200,000$ , fixed assets of $\text{₦}1,500,000$ , a long-term loan of $\text{₦}400,000$ , current liabilities of $\text{₦}250,000$ , trade debtors of $\text{₦}300,000$ , and cash at bank of $\text{₦}150,000$ . What is the value of the merchant's closing inventory (stock) in Naira?

Show answer & explanation

Answer: 500000

Answer

The value of the merchant's closing inventory is ₦500,000.

Working Capital is calculated as

\text{Capital Employed} - \text{Fixed Assets} = \text{₦}2,200,000 - \text{₦}1,500,000 = \text{₦}700,000

. Total Current Assets is then found by adding Current Liabilities:

\text{₦}700,000 + \text{₦}250,000 = \text{₦}950,000

. Subtracting the known current assets (trade debtors of

\text{₦}300,000

and cash at bank of

\text{₦}150,000

) leaves closing inventory equal to

\text{₦}500,000

. Note that the long-term loan of

\text{₦}400,000

is a non-current liability and does not affect the working capital calculation.

Step-by-Step Solution

1

Calculate Working Capital from Capital Employed and Fixed Assets

\text{Working Capital} = \text{₦}700,000

Capital Employed equals Fixed Assets plus Working Capital. Rearranging gives Working Capital = Capital Employed - Fixed Assets.

2

Calculate Total Current Assets

\text{Current Assets} = \text{₦}950,000

Working Capital equals Current Assets minus Current Liabilities. Rearranging gives Current Assets = Working Capital + Current Liabilities.

3

Deduct trade debtors and cash at bank from total Current Assets to isolate closing inventory

\text{Inventory} = \text{₦}500,000

Current Assets consists of inventory, trade debtors, and cash at bank. Subtracting the known items leaves the inventory value.

Key Concept

Backwards Calculation of Capital Structure and Working Capital Components

Estimated Time:2m 30s

Question 2Question →

A trading firm recorded current assets of ₦450,000, current liabilities of ₦180,000, fixed assets of ₦850,000, and long-term liabilities of ₦200,000. What is the working capital of the firm in Naira?

Show answer & explanation

Answer: 270000

Answer

The working capital of the firm is ₦270,000.

Working capital is calculated as Current Assets minus Current Liabilities. Subtracting ₦180,000 from ₦450,000 yields ₦270,000.

Step-by-Step Solution

1

Identify the components required for working capital.

Current Assets = ₦450,000 and Current Liabilities = ₦180,000.

Working capital measures short-term liquidity using short-term assets and short-term obligations.

2

Calculate working capital by subtracting current liabilities from current assets.

₦450,000 - ₦180,000 = ₦270,000.

The formula for working capital is Current Assets minus Current Liabilities.

Key Concept

Working Capital

Question 3Question →

The financial records of Kalu Trading Enterprises at the end of a trading period show the following balances:

- Fixed Assets: $\text{₦}800,000$
- Stock (Inventory): $\text{₦}250,000$
- Trade Debtors: $\text{₦}150,000$
- Cash at Bank: $\text{₦}100,000$
- Trade Creditors: $\text{₦}180,000$
- Bank Overdraft: $\text{₦}70,000$

What is the capital employed of the business?

\text{₦}1,050,000

\text{₦}1,300,000

\text{₦}1,550,000

\text{₦}550,000

Show answer & explanation

Answer: $\text{₦}1,050,000$

Answer

The capital employed of the business is

\text{₦}1,050,000

.

Capital Employed represents the net capital actively utilized in running the enterprise. It is computed as Fixed Assets plus Working Capital. Here, Working Capital is

\text{₦}500,000 - \text{₦}250,000 = \text{₦}250,000

. Adding this to Fixed Assets of

\text{₦}800,000

yields

\text{₦}1,050,000

.

Step-by-Step Solution

1

Calculate Total Current Assets

Current Assets = Stock + Trade Debtors + Cash at Bank =

\text{₦}250,000 + \text{₦}150,000 + \text{₦}100,000 = \text{₦}500,000

Current assets comprise short-term assets convertible into cash within one trading cycle.

2

Calculate Total Current Liabilities

Current Liabilities = Trade Creditors + Bank Overdraft =

\text{₦}180,000 + \text{₦}70,000 = \text{₦}250,000

Current liabilities are short-term debts due within one year.

3

Calculate Net Working Capital

Working Capital = Current Assets - Current Liabilities =

\text{₦}500,000 - \text{₦}250,000 = \text{₦}250,000

Working capital measures liquid capital available for daily operations.

4

Calculate Capital Employed

Capital Employed = Fixed Assets + Working Capital =

\text{₦}800,000 + \text{₦}250,000 = \text{₦}1,050,000

Capital employed reflects the total long-term assets and net working capital invested in operating the business.

Key Concept

Capital Employed = Fixed Assets + Working Capital (or Total Assets - Current Liabilities)

Question 4Question →

An enterprise presents the following financial balances at the end of its trading year:

- Premises and Machinery: $\text{₦}1,850,000$
- Stock (Inventory): $\text{₦}410,000$
- Trade Debtors: $\text{₦}240,000$
- Cash at Bank: $\text{₦}150,000$
- Trade Creditors: $\text{₦}270,000$
- Accrued Expenses: $\text{₦}130,000$
- Long-term Loan: $\text{₦}600,000$

What is the Capital Employed of the enterprise in Naira ( $\text{₦}$ )?

Show answer & explanation

Answer: 2250000

Answer

The Capital Employed of the enterprise is

\text{₦}2,250,000

.

Capital Employed represents the total resources employed in the business operations. It is computed as Fixed Assets plus Working Capital. First, calculate Current Assets (Stock

\text{₦}410,000

+ Debtors

\text{₦}240,000

+ Bank

\text{₦}150,000

=

\text{₦}800,000

) and Current Liabilities (Creditors

\text{₦}270,000

+ Accrued Expenses

\text{₦}130,000

=

\text{₦}400,000

). Working Capital is

\text{₦}800,000 - \text{₦}400,000 = \text{₦}400,000

. Adding Working Capital to Fixed Assets (Premises and Machinery

\text{₦}1,850,000

) gives a Capital Employed of

\text{₦}2,250,000

.

Step-by-Step Solution

1

Determine total Current Assets

Current Assets =

\text{₦}410,000 + \text{₦}240,000 + \text{₦}150,000 = \text{₦}800,000

Current assets consist of short-term liquid assets including stock, debtors, and cash at bank.

2

Determine total Current Liabilities

Current Liabilities =

\text{₦}270,000 + \text{₦}130,000 = \text{₦}400,000

Current liabilities consist of short-term obligations payable within a year, including trade creditors and accrued expenses.

3

Calculate Working Capital

Working Capital =

\text{₦}800,000 - \text{₦}400,000 = \text{₦}400,000

Working capital is the net operational buffer calculated as Current Assets minus Current Liabilities.

4

Compute Capital Employed

Capital Employed =

\text{₦}1,850,000 + \text{₦}400,000 = \text{₦}2,250,000

Capital Employed represents the total long-term assets and funds financing the business, calculated as Fixed Assets plus Working Capital (or Total Assets minus Current Liabilities).

Key Concept

Capital Employed represents the total funds actively utilized in running a business. It can be computed either as Fixed Assets + Working Capital or Total Assets - Current Liabilities.

Question 5Question →

The financial extract of Chief Adebayo's enterprise at the end of the trading year shows the following balances:

- Fixtures and Fittings: $\text{₦}650,000$
- Motor Vehicles: $\text{₦}1,200,000$
- Inventory: $\text{₦}350,000$
- Trade Debtors: $\text{₦}180,000$
- Cash at Bank: $\text{₦}120,000$
- Trade Creditors: $\text{₦}220,000$
- Accrued Expenses: $\text{₦}30,000$

What is the capital employed of the business?

₦2,100,000

₦2,250,000

₦2,500,000

₦2,750,000

Show answer & explanation

Answer: ₦2,250,000

Answer

₦2,250,000

Capital Employed is defined as Fixed Assets plus Working Capital (or Total Assets minus Current Liabilities). Fixed Assets equal

\text{₦}1,850,000

and Working Capital equals

\text{₦}400,000

(

\text{₦}650,000 - \text{₦}250,000

), yielding

\text{₦}2,250,000

.

Step-by-Step Solution

1

Calculate Total Fixed Assets

Fixtures and Fittings (₦650,000) + Motor Vehicles (₦1,200,000) = ₦1,850,000

Identify long-term assets used in generating revenue.

2

Calculate Current Assets

Inventory (₦350,000) + Trade Debtors (₦180,000) + Cash at Bank (₦120,000) = ₦650,000

Sum all short-term liquid assets.

3

Calculate Current Liabilities

Trade Creditors (₦220,000) + Accrued Expenses (₦30,000) = ₦250,000

Sum all short-term obligations.

4

Calculate Working Capital

Current Assets (₦650,000) - Current Liabilities (₦250,000) = ₦400,000

Working capital is net short-term asset position.

5

Calculate Capital Employed

Fixed Assets (₦1,850,000) + Working Capital (₦400,000) = ₦2,250,000

Capital employed represents total net assets invested in the enterprise.

Key Concept

Capital Employed Calculation

Estimated Time:1m 30s

Question 6Question →

The financial records of Tari Traders show the following balances at the end of the trading period:
- Stock: $\text{₦}180,000$
- Trade Debtors: $\text{₦}120,000$
- Cash at Bank: $\text{₦}50,000$
- Trade Creditors: $\text{₦}100,000$
- Bank Overdraft: $\text{₦}50,000$

What is the working capital of Tari Traders?

\text{₦}200,000

\text{₦}500,000

\text{₦}350,000

\text{₦}250,000

Show answer & explanation

Answer: $\text{₦}200,000$

Answer

The working capital of Tari Traders is

\text{₦}200,000

.

Working capital is computed as Current Assets minus Current Liabilities. Total Current Assets equal

\text{₦}350,000

(

\text{₦}180,000 + \text{₦}120,000 + \text{₦}50,000

) and Total Current Liabilities equal

\text{₦}150,000

(

\text{₦}100,000 + \text{₦}50,000

). Subtracting total current liabilities from total current assets gives

\text{₦}200,000

.

Step-by-Step Solution

1

Calculate Total Current Assets

\text{₦}180,000 + \text{₦}120,000 + \text{₦}50,000 = \text{₦}350,000

Current assets consist of resources expected to be converted into cash within an accounting year (Stock, Trade Debtors, and Cash at Bank).

2

Calculate Total Current Liabilities

\text{₦}100,000 + \text{₦}50,000 = \text{₦}150,000

Current liabilities are short-term financial obligations due within one year (Trade Creditors and Bank Overdraft).

3

Subtract Current Liabilities from Current Assets

\text{Working Capital} = \text{₦}350,000 - \text{₦}150,000 = \text{₦}200,000

Working capital measures short-term operational liquidity.

Key Concept

Working Capital Calculation

Estimated Time:1m 0s

Question 7Question →

Mrs. Bello, a sole trader, presents the following financial balances at the end of the accounting period:

- Stock of goods: $\text{₦}120,000$
- Trade debtors: $\text{₦}50,000$
- Cash at bank: $\text{₦}30,000$
- Trade creditors: $\text{₦}60,000$
- Accrued wages: $\text{₦}15,000$

What is the net working capital of the business?

\text{₦}125,000

\text{₦}140,000

\text{₦}200,000

\text{₦}275,000

Show answer & explanation

Answer: $\text{₦}125,000$

Answer

The net working capital of the business is

\text{₦}125,000

.

Working capital is calculated as Current Assets minus Current Liabilities. Summing stock (₦120,000), debtors (₦50,000), and cash (₦30,000) yields ₦200,000 in current assets. Summing creditors (₦60,000) and accrued wages (₦15,000) yields ₦75,000 in current liabilities. Subtracting ₦75,000 from ₦200,000 gives ₦125,000.

Step-by-Step Solution

1

Calculate Total Current Assets

\text{Total Current Assets} = \text{Stock} + \text{Debtors} + \text{Cash at bank} = \text{₦}120,000 + \text{₦}50,000 + \text{₦}30,000 = \text{₦}200,000

Current assets consist of short-term assets convertible to cash within one financial year.

2

Calculate Total Current Liabilities

\text{Total Current Liabilities} = \text{Creditors} + \text{Accrued wages} = \text{₦}60,000 + \text{₦}15,000 = \text{₦}75,000

Current liabilities include short-term obligations payable within the accounting year.

3

Apply the Working Capital Formula

\text{Working Capital} = \text{Current Assets} - \text{Current Liabilities} = \text{₦}200,000 - \text{₦}75,000 = \text{₦}125,000

Net working capital measures the operational liquidity available to run daily business activities.

Key Concept

Working Capital Formula

Question 8Question →

The financial extract of Danjuma & Sons Enterprises at the close of the trading year reveals the following account balances:

- Premises and Machinery: $\text{₦}3,500,000$
- Inventory (Stock): $\text{₦}850,000$
- Trade Debtors: $\text{₦}450,000$
- Bank Overdraft: $\text{₦}300,000$
- Trade Creditors: $\text{₦}500,000$
- 10% Long-term Debentures: $\text{₦}1,200,000$

What is the Capital Owned (Proprietor's Capital) of the enterprise in Naira?

Show answer & explanation

Answer: 2800000

Answer

The Capital Owned of the enterprise is ₦2,800,000.

Capital Owned represents the net equity belonging strictly to the owner. It is calculated by taking Total Assets (Fixed Assets ₦3,500,000 + Current Assets ₦1,300,000 = ₦4,800,000) and subtracting Total Liabilities (Current Liabilities ₦800,000 + Long-term Debentures ₦1,200,000 = ₦2,000,000), giving ₦2,800,000. Alternatively, subtracting long-term liabilities from Capital Employed (₦4,000,000 - ₦1,200,000) yields ₦2,800,000.

Step-by-Step Solution

1

Identify and sum total current assets

Total Current Assets = ₦850,000 + ₦450,000 = ₦1,300,000

Current assets consist of short-term liquid assets such as inventory and trade debtors.

2

Identify and sum total current liabilities

Total Current Liabilities = ₦300,000 + ₦500,000 = ₦800,000

Current liabilities consist of short-term debts due within an accounting year, such as overdrafts and trade creditors.

3

Compute Working Capital

Working Capital = ₦1,300,000 - ��800,000 = ₦500,000

Working capital measures net current assets available for daily operations.

4

Compute Capital Employed

Capital Employed = Fixed Assets (₦3,500,000) + Working Capital (₦500,000) = ₦4,000,000

Capital employed represents total net assets invested in the business.

5

Compute Capital Owned

Capital Owned = Capital Employed (₦4,000,000) - Long-term Liabilities (₦1,200,000) = ₦2,800,000

Capital owned is the owner's net equity, derived by deducting non-current borrowed capital (debentures) from capital employed.

Key Concept

Capital Structure Calculations (Working Capital, Capital Employed, Capital Owned)

Question 9Question →

Emeka Enterprise presented the following financial balances at the end of its accounting year:

- Equipment and Motor Vehicles: $\text{₦}1,400,000$
- Inventory: $\text{₦}350,000$
- Trade Debtors: $\text{₦}180,000$
- Cash at Bank: $\text{₦}120,000$
- Trade Creditors: $\text{₦}220,000$
- Accrued Expenses: $\text{₦}80,000$
- 10% Long-term Debentures: $\text{₦}500,000$

What is the value of the enterprise's Capital Owned?

\text{₦}1,250,000

\text{₦}1,550,000

\text{₦}1,750,000

\text{₦}2,050,000

Show answer & explanation

Answer: $\text{₦}1,250,000$

Answer

The correct Capital Owned is

\text{₦}1,250,000

.

The correct answer derives from calculating Total Assets (

\text{₦}2,050,000

) minus Total Liabilities (

\text{₦}800,000

), yielding

\text{₦}1,250,000

as the net capital belonging to the owner.

Step-by-Step Solution

1

Calculate Total Assets

Total Assets = Fixed Assets + Current Assets =

\text{₦}1,400,000 + (\text{₦}350,000 + \text{₦}180,000 + \text{₦}120,000) = \text{₦}2,050,000

Total assets comprise all fixed assets and current assets owned by the enterprise.

2

Calculate Total Liabilities

Total Liabilities = Current Liabilities + Long-term Liabilities = (

\text{₦}220,000 + \text{₦}80,000

) +

\text{₦}500,000 = \text{₦}800,000

Total liabilities combine short-term obligations (creditors and accrued expenses) and long-term debt (debentures).

3

Compute Capital Owned

Capital Owned = Total Assets - Total Liabilities =

\text{₦}2,050,000 - \text{₦}800,000 = \text{₦}1,250,000

Capital Owned (Net Assets / Owner's Equity) represents the net worth remaining after deducting all external obligations from total assets.

Key Concept

Capital Owned (Net Worth / Owner's Equity)

Estimated Time:2m 0s

Question 10Question →

The financial extract of Alhaji Usman Trading Company at the end of its trading year reveals the following account balances:

- Premises: $\text{₦}2,500,000$
- Equipment: $\text{₦}800,000$
- Stock (Inventory): $\text{₦}450,000$
- Trade Debtors: $\text{₦}250,000$
- Cash at Bank: $\text{₦}100,000$
- Trade Creditors: $\text{₦}200,000$
- Bank Overdraft: $\text{₦}150,000$

What is the Capital Employed of the business?

\text{₦}3,750,000

\text{₦}4,100,000

\text{₦}4,450,000

\text{₦}3,900,000

Show answer & explanation

Answer: $\text{₦}3,750,000$

Answer

The Capital Employed of Alhaji Usman Trading Company is

\text{₦}3,750,000

.

The value stating

\text{₦}3,750,000

is correct because Capital Employed equals Fixed Assets plus Working Capital. Fixed Assets are Premises (

\text{₦}2,500,000

) + Equipment (

\text{₦}800,000

) =

\text{₦}3,300,000

. Working Capital is Current Assets (Stock

\text{₦}450,000

+ Debtors

\text{₦}250,000

+ Cash

\text{₦}100,000

=

\text{₦}800,000

) minus Current Liabilities (Creditors

\text{₦}200,000

+ Overdraft

\text{₦}150,000

=

\text{₦}350,000

), yielding

\text{₦}450,000

. Therefore, Capital Employed =

\text{₦}3,300,000 + \text{₦}450,000 = \text{₦}3,750,000

.

Step-by-Step Solution

1

Calculate total Fixed Assets

Fixed Assets = Premises (

\text{₦}2,500,000

) + Equipment (

\text{₦}800,000

) =

\text{₦}3,300,000

Fixed assets represent long-term capital assets used in operations.

2

Calculate total Current Assets

Current Assets = Stock (

\text{₦}450,000

) + Trade Debtors (

\text{₦}250,000

) + Cash at Bank (

\text{₦}100,000

) =

\text{₦}800,000

Current assets comprise short-term resources convertible to cash within an accounting year.

3

Calculate total Current Liabilities

Current Liabilities = Trade Creditors (

\text{₦}200,000

) + Bank Overdraft (

\text{₦}150,000

) =

\text{₦}350,000

Current liabilities are short-term obligations due within one year.

4

Calculate Working Capital

Working Capital = Current Assets (

\text{₦}800,000

) - Current Liabilities (

\text{₦}350,000

) =

\text{₦}450,000

Working capital measures net operational liquidity.

5

Calculate Capital Employed

Capital Employed = Fixed Assets (

\text{₦}3,300,000

) + Working Capital (

\text{₦}450,000

) =

\text{₦}3,750,000

Capital Employed is the total capital actively invested in running the business.

Key Concept

Capital Employed Calculation

Question 11Question →

The financial records of Folake Traders at the close of the trading year show the following balance sheet balances:

Financial Item	Amount ( $\text{₦}$ )
Premises	$1,200,000$
Motor Vehicles	$800,000$
Stock of Goods	$450,000$
Trade Debtors	$250,000$
Cash at Bank	$150,000$
Trade Creditors	$300,000$
Bank Overdraft	$150,000$
$10$ -Year Bank Loan	$500,000$

What is the working capital of Folake Traders?

\text{₦}400,000

\text{₦}1,300,000

\text{₦}550,000

\text{₦}250,000

Show answer & explanation

Answer: $\text{₦}400,000$

Answer

\text{₦}400,000

Working capital is calculated as

\text{Current Assets} - \text{Current Liabilities}

. Summing the current assets gives

\text{Stock} (\text{₦}450,000) + \text{Debtors} (\text{₦}250,000) + \text{Cash at Bank} (\text{₦}150,000) = \text{₦}850,000

. Summing the current liabilities gives

\text{Trade Creditors} (\text{₦}300,000) + \text{Bank Overdraft} (\text{₦}150,000) = \text{₦}450,000

. Subtracting current liabilities from current assets gives

\text{₦}850,000 - \text{₦}450,000 = \text{₦}400,000

. Note that long-term liabilities such as the

10

-Year Bank Loan and fixed assets such as Premises and Motor Vehicles are excluded.

Step-by-Step Solution

1

Identify and sum all Current Assets

Current Assets = Stock of Goods (

\text{₦}450,000

) + Trade Debtors (

\text{₦}250,000

) + Cash at Bank (

\text{₦}150,000

) =

\text{₦}850,000

Current assets consist of short-term liquid assets convertible to cash within one financial period. Fixed assets (Premises and Motor Vehicles) are excluded.

2

Identify and sum all Current Liabilities

Current Liabilities = Trade Creditors (

\text{₦}300,000

) + Bank Overdraft (

\text{₦}150,000

) =

\text{₦}450,000

Current liabilities are short-term debts due within one year. Long-term liabilities (

10

-Year Bank Loan) are excluded.

3

Apply the Working Capital formula

Working Capital = Current Assets - Current Liabilities =

\text{₦}850,000 - \text{₦}450,000 = \text{₦}400,000

Working capital measures a business's operational liquidity available for day-to-day business activities.

Key Concept

Working Capital Calculation

Question 12Question →

The following financial balance summary belongs to Kofi Retail Enterprises at the end of its trading period:

- Fixed Assets: $\text{₦}1,800,000$
- Current Assets: $\text{₦}650,000$
- Current Liabilities: $\text{₦}250,000$
- Long-term Loan: $\text{₦}400,000$

What is the Capital Employed of the business?

\text{₦}2,200,000

\text{₦}2,450,000

\text{₦}2,700,000

\text{₦}1,800,000

Show answer & explanation

Answer: $\text{₦}2,200,000$

Answer

The Capital Employed of Kofi Retail Enterprises is

\text{₦}2,200,000

.

Capital Employed is computed either as

\text{Fixed Assets} + \text{Working Capital}

or

\text{Total Assets} - \text{Current Liabilities}

. Working Capital is

\text{₦}650,000 - \text{₦}250,000 = \text{₦}400,000

. Adding this to Fixed Assets (

\text{₦}1,800,000

) gives

\text{₦}2,200,000

.

Step-by-Step Solution

1

Calculate Working Capital

Working Capital = Current Assets - Current Liabilities =

\text{₦}650,000 - \text{₦}250,000 = \text{₦}400,000

Working Capital represents the net operational liquidity available to the firm.

2

Calculate Capital Employed

Capital Employed = Fixed Assets + Working Capital =

\text{₦}1,800,000 + \text{₦}400,000 = \text{₦}2,200,000

Capital Employed measures the total value of assets utilized by the business to generate revenue (or Total Assets minus Current Liabilities).

Key Concept

Capital Employed Calculation

Estimated Time:1m 30s

Question 13Question →

The accounting balances extracted from the books of Nkem Commercial Enterprises at the end of its financial year are as follows:

Account Title	Amount ( $\text{₦}$ )
Motor Vehicles & Equipment	$3,200,000$
Stock of Goods	$850,000$
Trade Debtors	$450,000$
Cash in Hand	$200,000$
Trade Creditors	$600,000$
Accrued Rent	$150,000$

What is the net working capital of the enterprise?

\text{₦}750,000

\text{₦}1,500,000

\text{₦}2,250,000

\text{₦}3,950,000

Show answer & explanation

Answer: $\text{₦}750,000$

Answer

The net working capital of Nkem Commercial Enterprises is

\text{₦}750,000

.

Net Working Capital is defined as the surplus of current assets over current liabilities. Adding the stock, debtors, and cash gives total current assets of

\text{₦}1,500,000

. Subtracting the sum of creditors and accrued rent (

\text{₦}750,000

) yields the net working capital of

\text{₦}750,000

.

Step-by-Step Solution

1

Identify and sum all Current Assets

Stock (

\text{₦}850,000

) + Trade Debtors (

\text{₦}450,000

) + Cash in Hand (

\text{₦}200,000

) =

\text{₦}1,500,000

Current assets consist of short-term liquid assets convertible to cash within an accounting year.

2

Identify and sum all Current Liabilities

Trade Creditors (

\text{₦}600,000

) + Accrued Rent (

\text{₦}150,000

) =

\text{₦}750,000

Current liabilities are short-term financial obligations due within one year.

3

Calculate Net Working Capital

Current Assets (

\text{₦}1,500,000

) - Current Liabilities (

\text{₦}750,000

) =

\text{₦}750,000

Working Capital measures operational liquidity available for day-to-day business operations.

Key Concept

Net Working Capital Formula

Capital Structure Calculations (Working Capital, Capital Employed, Capital Owned)

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