. By what amount did working capital change?
Question
. By what amount did working capital change?
Solution
To answer this question, you need to follow these steps:
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Identify the time period you're interested in. Working capital can change from month to month, quarter to quarter, or year to year.
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Find the company's current assets and current liabilities at the beginning of the time period. This information can typically be found on the company's balance sheet.
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Calculate the working capital at the beginning of the time period. Working capital is calculated as current assets minus current liabilities.
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Find the company's current assets and current liabilities at the end of the time period.
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Calculate the working capital at the end of the time period.
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Subtract the working capital at the beginning of the time period from the working capital at the end of the time period. This will give you the change in working capital.
Please note that a positive change means an increase in working capital, which could indicate that the company is generating more cash or reducing its short-term debt. A negative change means a decrease in working capital, which could indicate that the company is using more cash or taking on more short-term debt.
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