Ask Question
4 October, 23:26

The Maurer Company has a long-term debt ratio of. 60 and a current ratio of 1.20. Current liabilities are $940, sales are $5,120, profit margin is 9.30 percent, and ROE is 16.90 percent. What is the amount of the firm's net fixed assets?

+4
Answers (1)
  1. 4 October, 23:54
    0
    The amount of the firm's net fixed assets is $4,321

    Explanation:

    Profit margin = Net income / Sales

    Net income = Profit margin x Sales = 9.30% x $5,120 = $476.16

    ROE = Net Income/Equity

    Equity = Net Income/ROE = $476.16/16.90% = $2,818

    Long-term debt ratio = Long-term debt/Equity

    Long-term debt = Long-term debt ratio x Equity = 0.6 x $2,818 = $1,691

    Basing on accounting equation:

    Total asset = Current Liabilities + Long-term debt + Equity = $940 + $1,691 + $2,818 = $5,449

    Current ratio = Current asset/Current Liabilities

    Current asset = Current ratio x Current Liabilities = 1.2 x $940 = $1,128

    Fixed assets = Total asset - Current asset = $5,449 - $1,128 = $4,321
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “The Maurer Company has a long-term debt ratio of. 60 and a current ratio of 1.20. Current liabilities are $940, sales are $5,120, profit ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers