HW Assignment 16 - Supply Chains and Working Capital Management During the wake of the financial crisis, Ben Bernanke, chairman of the Federal Reserve, said that "shortening the cash cycle and better use of working capital" are the most important factors as private sector businesses struggle to overcome the current economic volatility and difficulty in accessing capital markets (IBM Global Business Services, "Managing Working Capital in the New Economic Environment, "http://www-935.ibm.com/services/uk/bcs/pdf/working_capital_paper.pdf). Considering how important working capital management is, Water and Power Co. decided to evaluate the amount of working capital being used in the firm and explore the prospects of how its working capital will be financed. Water and Power Co. reported the following results for current assets and liabilities on its most recent balance sheets. Interestingly, the company's sales did not change-it reported sales of $27,750 for its most recent year as well as for last year. The columns labeled "Ending ($)" show results at the end of the most recent year, and the columns labeled "Beginning ($)" show results at the end of the previous year: Beginning ($) Ending ($) Beginning ($) Ending ($) Current assets Cash Accounts receivable Inventory 6,500 12,500 9,750 12,500 10,000 8,500 Current liabilities Accounts payable Notes payable Accruals 12,000 8,000 0 12,250 9,000 0 Using the information given and a 365-day year, calculate days of working capital, net working capital, and net operating working capital for Water and Power Co. Use your calculations to complete the following statements: days in the previous year to days at the Water and Power Co.'s days of working capital improved from end of the most recent year. 202.23 134.82 The company's net working capital increased from $8,750.00 i 101.93 Water and Power Co.'s net operating working capital increased 292.65 end of last year. us year to at the end of last year. in the previous year to $18,750.00 at the During the wake of the financial crisis, Ben Bernanke, chairman of the Federal Reserve, said that "shortening the cash cycle and better use of working capital" are the most important factors as private-sector businesses struggle to overcome the current economic volatility and difficulty in accessing capital markets (IBM Global Business Services, "Managing Working Capital in the New Economic Environment, 'http://www-935.ibm.com/services/uk/bcs/pdf/working_capital_paper.pdf). Considering how important working capital management is, Water and Power Co. decided to evaluate the amount of working capital being used in the firm and explore the prospects of how its working capital will be financed. Water and Power Co. reported the following results for current assets and liabilities on its most recent balance sheets. Interestingly, the company's sales did not change-it reported sales of $27,750 for its most recent year as well as for last year. The columns labeled "Ending ($)" show results at the end of the most recent year, and the columns labeled "Beginning ($)" show results at the end of the previous year: Beginning ($) Ending ($) Beginning ($) Ending ($) Current assets Cash Accounts receivable Inventory 6,500 12,500 9,750 12,500 10,000 8,500 Current liabilities Accounts payable Notes payable Accruals 12,000 8,000 0 12,250 9,000 0 Using the information given and a 365-day year, calculate days of working capital, net working capital, and net operating working capital for Water and Power Co. Use your calculations to complete the following statements: days at the Water and Power Co.'s days of working capital improved from days in the previous year to end of the most recent year. The company's net working capital increased from $8,750.00 in the previous year to at Water and Power Co.'s net operating working capital increased from in the previous y end of last year. 82.20 115.09 123.30 98.65 last year. 50.00 at the Water and Power Co. reported the following results for current assets and liabilities on its most recent balance sheets. Interestingly, the company's sales did not change-it reported sales of $27,750 for its most recent year as well as for last year. The columns labeled "Ending ($)" show results at the end of the most recent year, and the columns labeled "Beginning ($)" show results at the end of the previous year: Beginning ($) Ending ($) Beginning ($) Ending ($) Current assets Cash Accounts receivable Inventory 6,500 12,500 9,750 12,500 10,000 8,500 Current liabilities Accounts payable Notes payable Accruals 12,000 8,000 0 12,250 9,000 0 Using the information given and a 365-day year, calculate days of working capital, net working capital, and net operating working capital for Water and Power Co. Use your calculations to complete the following statements: Water and Power Co.'s days of working capital improved from days in the previous year to days at the end of the most recent year. The company's net working capital increased from $8,750.00 in the previous year to at the end of last year, Water and Power Co.'s net operating working capital increased from $9,750.00 year to $18,750.00 at the end of last year. $11,700.00 $7,500.00 $11,000.00 Consider the following statement: Water and Power Co. reported the following results for current assets and liabilities on its most recent balance sheets. Interestingly, the company's sales did not change-it reported sales of $27,750 for its most recent year as well as for last year. The columns labeled "Ending ($)" show results at the end of the most recent year, and the columns labeled "Beginning ($)" show results at the end of the previous year: Beginning ($) Ending ($) Beginning ($) Ending ($) Current assets Cash Accounts receivable Inventory 6,500 12,500 9,750 12,500 10,000 8,500 Current liabilities Accounts payable Notes payable Accruals 12,000 8,000 0 12,250 9,000 0 Using the information given and a 365-day year, calculate days of working capital, net working capital, and net operating working capital for Water and Power Co. Use your calculations to complete the following statements: Water and Power Co.'s days of working capital improved from days in the previous year to days at the end of the most recent year. The company's net working capital increased from $8,750.00 in the previous year to at the end of last year. Water and Power Co.'s net operating working capital increased from in the previous year to $18,750.00 at the end of last year. $16,750.00 $13,400.00 $10,050.00 $20,100.00 Consider the following statement: Assuming that other things remain constant, if Water and Power Co. has very, very low working capital face, it implies that the company has n business risk. Based on your understanding of working capital, operating assets, and nonoperating assets, identify whether the preceding statement is true fa Water and Power Co. O This statement is false for Water and Power Co. This statement is true for Water and Power Co