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Muffin’s Masonry, Inc.’s balance sheet lists net fixed assets as $26 million. The fixed assets could...

Muffin’s Masonry, Inc.’s balance sheet lists net fixed assets as $26 million. The fixed assets could currently be sold for $43 million. Muffin’s current balance sheet shows current liabilities of $11.5 million and net working capital of $10.5 million. If all the current accounts were liquidated today, the company would receive $7.85 million cash after paying the $11.5 million in current liabilities.

What is the book value of Muffin’s Masonry’s assets today and the market value of these assets? (Enter your answer in millions of dollars rounded to 2 decimal places.

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Answer #1

Current assets (book value) = Net working capital (book value) + Current liabilities (book value)

= 10.5 + 11.5 = 22, or $22 million

Total assets(book value) = Current Assets(book value) + Fixed Assets(book value)

= $22m + $26m = $48m

Current assets (market value) = Net working capital (market value) + Current liabilities (market value)

= 7.85 + 11.5 = 19.35, or $19.35 million

Total assets (market value) = Current Assets(market value) + Fixed Assets(market value)

= $19.35m + $43m = $62.35m

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