Burrow, Incorporated, has current assets of $\$ 2,290$, net fixed assets of $\$ 10,500$, current liabilities of $\$ 1,410$, and long-term debt of $\$ 4,100$.

AWhat is the value of the shareholders' equity account for this firm?

Note: Do not round intermediate calculations and round your answer to the nearest whole number.

BHow much is net working capital?

Note: Do not round intermediate calculations and round your answer to the nearest whole number.

a. Shareholders' equity

b. Net working capital

The firm's total assets are the sum of its current assets and net fixed assets. Given that the current assets are $\$2,290$ and the net fixed assets are $\$10,500$, we calculate the total assets as:
\[\text{Total Assets} = \$2,290 + \$10,500 = \$12,790.\]
Next, the firm's total liabilities are the sum of its current liabilities and term debt. Given that the current liabilities are $\$1,410$ and the term debt is $\$4,100$, we calculate the total liabilities as:
\[\text{Total Liabilities} = \$1,410 + \$4,100 = \$5,510.\]
The fundamental accounting equation states that Total Assets = Total Liabilities + Shareholders' Equity. Rearranging this to solve for Shareholders' Equity gives:
\[\text{Shareholders' Equity} = \text{Total Assets} - \text{Total Liabilities}\]
\[\text{Shareholders' Equity} = \$12,790 - \$5,510 = \$7,280.\]
Thus, the value of the shareholders' equity account is $\$7,280$.

Calculating Net Working Capital

The net working capital is defined as the difference between a firm's current assets and its current liabilities. Given the current assets of $\$2,290$ and current liabilities of $\$1,410$, the calculation is:
\[\text{Net Working Capital} = \text{Current Assets} - \text{Current Liabilities}\]
\[\text{Net Working Capital} = \$2,290 - \$1,410 = \$880.\]
Therefore, the firm's net working capital is $\$880$.

Examples

In business finance, analysts use the accounting equation to assess a company's financial health. For example, by calculating shareholders' equity, investors can determine the net value of the company that would be returned to shareholders if all assets were liquidated and all debts were paid. Similarly, calculating net working capital provides insights into a company's short-term liquidity and its ability to cover immediate operational expenses. These figures are foundational for making informed investment and management decisions.