The book value of owners equity will decrease when the market value of inventory increases and since accrued expenses are recorded as liabilities, the net working capital will decrease when accrued expenses increase. Additionally, the book value of long-term debt will decrease when it is repaid. Taxable income increases when depreciation increases. The net working capital can be calculated by subtracting current liabilities from current assets. When a new 3-year loan is obtained, it will increase the long-term debt. The sustainable growth rate is defined as the maximum rate at which a firm can grow given certain conditions. The options provided for the value of net working capital are: A) $9,800, B) $10,400, C) $18,900, D) $21,300, and E) $23,200. The sustainable growth rate can be determined based on the conditions provided. To analyze the financial performance and costs of Builder's Outlet over the past three years, the chief financial officer should compare the income statement, balance sheet, common-size balance sheet, common-size income statement, and statement of cash flows.
