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 operating capital?
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 operating capital?
Operating capital refers to the amount of capital that a company needs to finance its day-to-day operations. It includes the funds needed to purchase inventory, pay for rent, utilities, and salaries, and cover other operating expenses. Operating capital is a crucial measure of a company's financial health, as it provides an indication of the amount of capital that the company requires to keep its operations running smoothly. Companies must manage their operating capital effectively to ensure that they have enough cash on hand to meet their daily operational expenses.
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