NNR Inc.'s balance sheet showed total current assets of $1,875,000 plus $4,225,000 of net fixed assets.All of these assets were required in operations.The firm's current liabilities consisted of $475,000 of accounts payable, $375,000 of 6% short-term notes payable to the bank, and $150,000 of accrued wages and taxes.Its remaining capital consisted of long-term debt and common equity.What was NNR's total investor-provided operating capital?

Question

Quizplus · Accepted Answer

Total current assets = $1,875,000
Net fixed assets = $4,225,000
Total assets = $6,100,000 ($1,875,000 + $4,225,000)
Current liabilities = $1,000,000 ($475,000 + $375,000 + $150,000)
Total investor-provided operating capital = Total assets - Current liabilities = $5,100,000
Remaining capital includes long-term debt and common equity and is not considered part of operating capital. Therefore, the total investor-provided operating capital is $5,475,000.

NNR Inc'S Balance Sheet Showed Total Current Assets of $1,875,000 Plus