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The Smathers Company has a long-term debt ratio (i.e., the ratio of long-term debt to long-term...

The Smathers Company has a long-term debt ratio (i.e., the ratio of long-term debt to long-term debt plus equity) of .53 and a current ratio of 1.42. Current liabilities are $2,470, sales are $10,690, profit margin is 10 percent, and ROE is 15 percent.
  
What is the amount of the firm’s net fixed assets? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
  
Net fixed assets            $

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Answer #1
Current ratio = Current assets / Current liabilities
1.42 = Current assets / 2470
Current assets = 1.42 * 2470 3507.4
Net income = Sales * Profit margin = 10690 * 10% 1069
ROE = Net income / Total Equity
15% = 1069 / Equity
Equity = 1069 / 15% 7126.67
Long term debt ratio = Long term debt / ( Long term debt + Equity )
0.53 = Long term debt / ( Long term debt + 7126.67 )
Long term debt = 0.53 * ( Long term debt + 7126.67 )
Long term debt = 0.53Long term debt + 3777.14
Long term debt - 0.53Long term debt = 3777.14
0.47Long term debt = 3777.14
Long term debt = 3777.14 / 0.47 8036.47
Long term debt + Equity + Current liabilities = Current assets + Net fixed assets
8036.47 + 7126.67 + 2470 = 3507.4 + Net fixed assets
Net fixed assets = 8036.47 + 7126.67 + 2470 - 3507.4    14125.74
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