Question

The Maurer Company has a long-term debt ratio of .60 and a current ratio of 1.60. Current liabilities are $970, sales are $5,150, profit margin is 9.30 percent, and ROE is 18.00 percent. What is the amount of the firm's net fixed assets?

Answer 1

Sale	$              5,150
Profit margin	9.30%
Profit=	$           478.95	5150*9.3%
Return on equity=	18%
Equity=	478.95/18%
Equity=	$        2,660.83
Long term debt	0.60
Equity + Current liability=	0.40	1-0.6
Equity + Current liability=	2660.83+970
Equity + Current liability=	$        3,630.83
Total Assets=	3630.83/0.40
Total Assets=	$        9,077.08
Current ratio	1.60
Current ratio=	Current assets/Current liabilities
1.60=	Current assets/970
Current assets=	1.60*970
Current assets=	$        1,552.00
Total assets=	Net Fixed asset+Current assets
9077.08=	Net Fixed asset+1552
Net fixed assets=	9077.08-1552
Net fixed assets=	$        7,525.08