Question

In: Finance

Please show all work. 1. Balance Sheet a) A firm has total assets of $280000, current...

Please show all work.

1. Balance Sheet

a) A firm has total assets of $280000, current assets of $76,000, current liabilities of $71,000 and total liabilities of $130,000. ◦

What is shareholders equity? ◦ What is the net working capital (NWC)? ◦ What is the value of the long-term assets? Assets = Liabilities + Stockholders’ Equity NWC = Current Assets – Current Liabilities Total Assets = Current Assets + Long-Term Assets

b) The balance sheet of Global Mills shows cash of $41,800, accounts receivable of $190,400 and inventory of $415,700. Long-term assets have a book value of $1,521,600 which is comprised of a building and some equipment. You can sell inventory for $387,000. You expect collect only $187,000 of the accounts receivable. The equipment can be sold for $610,000 and the building for $965,000. ◦ What is the book value and market value (MV) of assets? Which is higher? Book Value of Assets=Current Assets + Long-term Assets MV of Assets= MV of current assets +MV of long-term assets

Expert Solution

Answer 1

A.

Total assets = total liabilities + Equity

280000= 130000+Equity

Equity = 280000-130000= 150000

So shareholders Equity is $150000

Net working capital = Current Assets - current liabilities

=76000-71000

=$5000

So net working capital is $5000

Total Assets= long term Assets + current assets

280000 = long term Assets + 76000

Long term Assets = 280000-76000

=204000

Long term Assets is $204000

B.

Book value of current assets = Book value of cash + Accounts Receivable + inventory

=41800+190400+415700

=647900

Book value of long term Assets=1521600

Book value of Assets = Book value of current assets + Book value of long term Assets

=647900+1521600

2169500

So book value of total assets is $2169500

Market value of current assets = MV of cash + Accounts Receivable + inventory

=41800+187000+387000

=615800

Market value of long term Assets =610000+965000

=1575000

Market value of Assets= MV of long term Assets + MV of current assets

=1575000+615800

=2190800

So Market value of Assets is 2190800

jeff jeffy answered 1 year ago

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