Question

The Corrigan corporation’s 2018 and 2019 financial statements follow: Corrigan Corporation December 31 Balance Sheets (in thousands) 2019 2018 Assets Cash and cash equivalents $72,000 $65,000 Accounts Receivable 549,000 438,000 Inventories 894,000 813,000 Total current assets $1,515,000 $1,316,000 Net fixed assets 500,000 300,000 Total assets $2,015,000 $1,616,000 Liabilities and equity Accounts payable $80,000 $72,708 Notes payable 476,990 457,912 Total current liabilities $556,990 $530,620 Long-term debt 404,290 268,898 Total liabilities $961,280 $799,518 Common stock 799,010 554,880 Retained earnings 254,710 261,602 Total common equity $1,053,720 $816,482 Total liabilities and equity $2,015,000 $1,616,000 Corrigan corporation: Income statement (in thousands) 2019 2018 Sales $6,500,000 $6,335,000 COGS excluding depreciation 4,680,000 2,980,000 EBITDA $1,820,000 $3,355,000 Depreciation 159,000 154,500 EBIT $1,661,000 $3,200,500 Interest expense 67,000 43,000 EBT $1,594,000 $3,157,500 Taxes (40%) 637,600 1,263,000 Net income $956,400 $1,894,500 Using the Corrigan corporation’s financial statements, compute the Net investment in operating capital for 2019. Group of answer choices $500,000 $ 391,708 $ 47,578 $300,000

Answer 1

	2019	2018
Assets
Cash and cash equivalents	$72,000	$65,000
Accounts Receivable	$549,000	$438,000
Inventories	$894,000	$813,000
Total current assets	$1,515,000	$1,316,000
Net fixed assets	500,000	300,000
Total assets	$2,015,000	$1,616,000
Liabilities and equity
Accounts payable	$80,000	$72,708
Notes payable	476,990	457,912
Total current liabilities	$556,990	$530,620
Long-term debt	404,290	268,898
Total liabilities	$961,280	$799,518
Common stock	799,010	554,880
Retained earnings	254,710	261,602
Total common equity	1,053,720	816,482
Total liabilities and equity	$2,015,000	$1,616,000

Net Investment in Operating capital = Closing net Operating capital-Opening Net Operating Capital

Net operating capital = Net operating working capital+ Long term operatig asset

Net operating capital = Operating Current assets-operating Current Liability

operating current liability exclued any current loan or Notes payable.

	2019(Closing)	2018(Opening)
Cash and cash equivalents	$72,000	$65,000
Accounts Receivable	$549,000	$438,000
Inventories	$894,000	$813,000
Operating current assets(A)	$1,515,000	$1,316,000
Accounts payable	$80,000	$72,708
Operating Current Liability(B)	$80,000	$72,708
Net Operating Working Capital (A-B)=(C)	$1,435,000	$1,243,292
Long term operatig asset or Net Fixed Asset (D)	$500,000	$300,000
Net operating capital(C+D)	$1,935,000	$1,543,292

Net Investment in Operating capital = Closing net Operating capital-Opening Net Operating Capital

=>Net Investment in Operating capital=$1,935,000-$1,543,292

=>Net Investment in Operating capital=$391,708