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 $940, sales are $5,175, profit margin is 10.10 percent, and ROE is 18.70 percent. What is the amount of the firm's net fixed assets?

Expert Solution

Current Ratio = Current Assets / Current Liabilities
1.5 = Current Assets/ 940
Current Assets = 1410

Profit Margin = Net Income / Net Sales * 100
10.1 = Net Income / 5175 * 100
Net Income = 522.68

Return on Equity = Net Income / Total Equity * 100
18.7 = 522.68/ Total Equity * 100
Total Equity = 2795.08

Long Term Debt Ratio = Long term Debt / (Current Liabilities + Long Term Debt + Equity)
0.3 = Long term Debt / ( 940 + Long term Debt + 2795.08)

Long term Debt = 1600.75

Total Liabilities and Equity = Total Assets
Current Liabilities + Long Term Debt + Equity = Current Assets + Net Fixed Assets
940 + 1600.75 + 2795.08 = 1410+ Net Fixed Assets
Net Fixed Assets = 3925.83

jeff jeffy answered 2 years ago

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