Technical Question for Wells Fargo
I am having trouble with this specific problem...** A company has $100 in inventory at the beginning of the year, and you sold it for $50 at the end of the year. Walk me through the 3 financial statements.**
I thought the answer would be ...
• Revenue would be up $50 from the Sale and Net income would be $30 considering an estimate rate of 40% • For the cash flow from operating, the Net Income would be $30 and the Inventory would be $50 (Because you manufactured the inventory into real assets). The ending cash would be $80. • For the balance sheet, the Cash would be $80 and the inventory would be -$50, so the assets would be $30. For the Shareholder Equity side, the retained earnings would be $30 from the Net Income.
The MD told me that I did it wrong because I forgot to looking into the Change in NWC... Will someone help me? It's bothering me.
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