Arredondo, Inc. has current assets of $2,170, net fixed assets of $9,300, current liabilities of $1,350,...

Transcribed Image Text:

Arredondo, Inc. has current assets of $2,170, net fixed assets of $9,300, current liabilities of $1,350, and long-term debt of $3,980. Please build a balance sheet based on the above information and ask the following questions: (a) what is the value of the shareholders' equity account for this firm? How much is the net working capital? (b) Suppose one of Arredondo's major suppliers suddenly changed its collection policy and wanted to collect back a payment of $1,000 owed by Arredondo immediately. Arredondo was also informed by the supplier that there would be no extended payment option in the future from this supplier either. In order to not disturb the business operation, i.e. to keep current assets and net fixed assets as they are, what can Arredondo do? How much will be the net working capital in this scenario? Arredondo, Inc. has current assets of $2,170, net fixed assets of $9,300, current liabilities of $1,350, and long-term debt of $3,980. Please build a balance sheet based on the above information and ask the following questions: (a) what is the value of the shareholders' equity account for this firm? How much is the net working capital? (b) Suppose one of Arredondo's major suppliers suddenly changed its collection policy and wanted to collect back a payment of $1,000 owed by Arredondo immediately. Arredondo was also informed by the supplier that there would be no extended payment option in the future from this supplier either. In order to not disturb the business operation, i.e. to keep current assets and net fixed assets as they are, what can Arredondo do? How much will be the net working capital in this scenario?

Answer rating: 100% (QA)

SOLUTION To build the balance sheet for Arredondo Inc based on the provided information Assets Curre... View the full answer