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The Maurer Company has a long-term debt ratio of .30 and a current ratio of 1.50....

The Maurer Company has a long-term debt ratio of .30 and a current ratio of 1.50. Current liabilities are $990, sales are $5,120, profit margin is 9.60 percent, and ROE is 18.20 percent. What is the amount of the firm's net fixed assets?

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Answer #1
Current ratio = 1.50
Current liabilities = 990
Current ratio = Current assets / Current liabilities
Current assets = Current ratio * Current liabilities
Current assets = 1.50 * 990
Current assets = 1485
Net profit = Sales * profit margin
Net profit = 5120 * 9.60%
Net profit = 491.52
ROE = Net Income / Shareholder equity
Shareholder equity = Net Income / ROE
Shareholder equity = 491.52 / 18.20%
Shareholder equity = 2700.66
Debt ratio = 0.30
Equity ratio = 1 - Debt ratio
Equity ratio = 1 - 0.30
Equity ratio = 0.70
Total asset = 2700.66 / 0.70
Total asset = 3858.09
Net fixed assets = Total assets - Current assets
Net fixed assets = 3858.09 - 1485
Net fixed assets = 2373.09
Answer : 2373.09
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