Question

Air Taxi, Inc. has a long-term debt ratio of .48 and a current ratio of 1.27. Current liabilities are $3,526, sales are $10,792, profit margin is 8 percent, and ROE is 11.7 percent. What is the total of the firm's net fixed assets?

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Answer 1

Net Fixed Assets $ 16,487

Working:

a.	Current Ratio		=	Current Assets /Current Liabilities
	or,
	1.27		=	Current Assets /3526
	or,
	Current Assets		=	$         4,478
b.	Profit		=	Sales x Profit Margin
			=	$       10,792	x	8%
			=	$             863
c.	ROE		=	Profit/Equity
	or,
	0.117		=	863/Equity
	or,
	Equity		=	$         7,376
d.	Equity		$    7,376
	Current Liabilities		$    3,526
	Total		$ 10,902
	Total Assets		=	10902/(1-0.48)
			=	$       20,965
	Note: Opposite of Assets side comprises of Current Liabilities, Long term debt and Equity.
e.	Total Assets			$       20,965
	Less:Current Assets			$         4,478
	Total of Net fixed Assets			$       16,487