d. The figures on total new issues of

ate offering series (appearing on earlier
ain adjustments. For instance, sales of
hereas such sales are not covered in the cor-
ction is made from the original data for foreign
Also an adjustment is made to deduct from
issues which, although they were offered
The series on retirements covers the same
s series, and includes issues retired with
ceeds from new issues sold for refunding
iefly from individual records of each
ash transaction. The individual records
pearing in the financial press and statistical
data for companies which are required
Commission.

sive, but is is believed that the amount
tion to the volume covered. It is probable
s are of less significance in the post-war
rtain types of transactions not included
known sales, such as small private placements,
other securities of the same type. Further-

clude entrepreneurial capital used in forming
e securities financing, nor is the liquidation
the retirement data. Purchases of own

s or thrift plans are not treated as retirements.
irements of small companies may be omitted.
ssues omitted is compensated by the volume

eries omits exchanges and defaults unless they
on is made in the case of conversions or
for another, such as debentures converted

ed in issues and in retirements to the extent
nflated individual totals for issues and
unaffected, and more accurate data for net
esult.

6

2

WORKING CAPITAL OF NONFINANCIAL U.S. CORPORATIONS
December 31, 1975

The net working capital of nonfinancial U.S. corporations increased approximately $13 billion in 1975; this compares with gains of $19 billion in 1974 and $21 billion in 1973. Net working capital, which represents corporate investment in current assets in excess of current liabilities, totaled $274 billion at the close of 1975.

The approximately $13 billion rise in net working capital for the entire year 1975 was the result of a larger increase in total current assets than in total current liabilities. Current assets increased $19 billion, while current liabilities rose approximately $7 billion. The increases in both measures were significantly less than in the two previous years.

Inventories registered a $5 billion decline after reaching record levels in 1975. Notes and accounts receivable increased $5 billion compared with $23 billion in the preceding year. The more liquid components of current assets, cash and government securities, showed significant increases of $5 billion and $8 billion respectively. "Other current assets" rose approximately $3 billion.

On the liabilities side, notes and accounts payable declined over $5 billion during 1975, compared with an increase of $26 billion a year earlier. This year-to-year decline was the first registered in this component of current liabilities since 1949. Federal income tax liabilities fell $2 billion. "Other current liabilities", however, increased by $14 billion and U.S. Government advances and prepayments rose $1 billion.

Fourth Quarter Changes in Current Assets and Current Liabilities

The gain in net working capital during the fourth quarter of last year was approximately $2 billion compared with increases of nearly $3 billion in the previous quarter and $2 billion in the final quarter of 1974. Inventory investment reversed the downward trend of the first three quarters of 1975 and rose $6 billion while accounts receivable were little changed in the September-December period.

Traditional fourth quarter increases in holdings of cash in U.S. Government securities were again evidenced by approximate gains of $4 billion and $5 billion respectively. The ratio of these two items combined to total current liabilities--a frequently used measure of corporate liquidity--was .19 at the end of December 1975 as compared to .18 for the previous quarter and .17 a year earlier. However,

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another measure of corporate liquidity, the current ratio (the ratio of total current assets to total current liabilities), declined for the second succesive quarter to 1.60 but is still higher than the 1.58 registered at the end of the previous year.

1975 Investment and Sources of Financing

Besides the approximately $14 billion added to corporate working capital during 1975, non financial U.S. corporations invested about $104 billion for additions to plant and equipment within the United States and over $29 billion in other noncurrent assets including residential structures and fixed assets of foreign subsidiaries. To finance these long-term capital requirements, these corporations generated from internal sources over $105 billion or approximately 72 percent of the required funds as compared with 50 percent a year earlier. These corporations raised $37.1 billion through net new securities financing-sales minus retirements--of which $9.9 billion were from net new stock issues and $27.2 billion from net sales of debt securities. The balance

of the financing, approximately $5 billion, was provided by long-term bank and mortgage loans and other miscellaneous sources.

Technical Notes

1) Year-end data for this series are based on Statistics of Income data through 1971, which cover virtually all corporations in the United States. Statistics of income data may not be strictly compared from year to year because of changes in the tax laws, basis for filing returns, and processing the data for compilation purposes. All interim quarterly data and year-end estimates after 1971, are based on data compared from many other sources, including data on corporations registered with this Commission.

2) The item, cash on hand and in banks, incluses time certificates of deposit.

3) The item, U.S. Government securities, includes Federal agency issues.

4)

Receivable from and payable to the U.S. Government do not include amounts offset against each other on corporation's books of amounts arising from subcontracting which are not directly due from or to the U. S. Government. Wherever possible, adjustments have been made to include U.S. Government advances offset against inventories on corporations 'books.

5) The item, other current assets, includes marketable investments (other than Government securities and time certificates of deposits) as well as sundry current assets.

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6) The item, other current liabilities, includes commercial paper outstanding, the portion of long-term debt due in less than one year and miscellaneous current liabilities not elsewhere classified.

7) The current ratio is total current assets to total current liabilities.

8) The quick ratio is the summation of cash and U.S. Government securities to total current liabilities.

9) Figures are rounded and will not necessarily add to totals.

The accompanying table contains the aggregate estimates of current assets and current liabilities of nonfinancial U.S. corporations.