Question

Muffin’s Masonry, Inc.’s, balance sheet lists net fixed assets as $32.00 million. The fixed assets could currently be sold for $55.00 million. Muffin’s current balance sheet shows current liabilities of $14.50 million and net working capital of $13.50 million. If all the current accounts were liquidated today, the company would receive $8.15 million cash after paying the $14.50 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 answers in millions of dollars rounded to 2 decimal places.)

	BOOK VALUE		MARKET VALUE
Current assets	$  m		$  m
Fixed assets	m		m
Total	$  m		$  m

Answer 1

Book Value:

Fixed Assets = $32.00 million

Current Liabilities = $14.50 million
Net Working Capital = $13.50 million

Current Assets = Current Liabilities + Net Working Capital
Current Assets = $14.50 million + $13.50 million
Current Assets = $28.00 million

Total Assets = Current Assets + Fixed Assets
Total Assets = $28.00 million + $32.00 million
Total Assets = $60.00 million

Market Value:

Fixed Assets = $55.00 million

Current Liabilities = $14.50 million
Net Working Capital = $8.15 million

Current Assets = Current Liabilities + Net Working Capital
Current Assets = $14.50 million + $8.15 million
Current Assets = $22.65 million

Total Assets = Current Assets + Fixed Assets
Total Assets = $22.65 million + $55.00 million
Total Assets = $77.65 million