Question

The maurer has lon term debt ratio of .35 and a current ratio of 1.30. Current liabilites are $955, sales are 7210. profit margin is 8.3% and ROE is 17.5%. What is the amount of the firms net fixed assets?

Answer #1

current ratio=current assets/current liabilities

Hence current assets=(1.3*955)=$1241.5

Profit margin=net income/sales

Hence net income=(7210*8.3%)=$598.43

ROE=net income/equity

Hence equity=(598.43/0.175)=$3419.60

long term debt ratio= long term debt/( long term debt+equity)

0.35= long term debt/( long term debt+3419.6)

0.35( long term debt+3419.6)= long term debt

0.35 long term debt+1196.86= long term debt

long term debt=1196.86/(1-0.35)

=$1841.323077

Total assets=current assets+Fixed assets

Total assets=total liabilities+Total equity

current assets+Fixed assets=(current liabilities+long term debt)+equity

1241.5+fixed assets=955+$1841.323077+3419.60

fixed assets=(955+$1841.323077+3419.60)-1241.5

=**$4974.42(Approx).**

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