Question

Orem Corporation's current liabilities are $106,800, its long-term liabilities are $267,200, and its working capital is...

Orem Corporation's current liabilities are $106,800, its long-term liabilities are $267,200, and its working capital is $149,500. If the corporation's debt-to-equity ratio is 0.10, total long-term assets must equal:

  • $2,789,700

  • $3,964,500

  • $3,740,000

  • $3,857,700

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Answer #1
Calculation of amount of long term assets
Total debt = Current laibilities+long term laibilities
total debt = 106800+267200
total debt = 374000
Debt to equity ratio= 0.10
Total equity = total debt / 0.10
total equity = 374000/0.10
total equity = 3740000
total assets = total debt+total equity
total assets = 374000+3740000
total assets = 4114000
working capital = current assets-current laibilities
149500 = current assets- 106800
current assets = 256300
total long term assets = total asset -current assets
total long term assets = 4114000-256300
total long term assets = 3857700
Option $ 3857700 is correct
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