Question

The Maurer Company has a long-term debt ratio of .70 and a current ratio of 1.30. Current liabilities are $950, sales are $5,185, profit margin is 9.90 percent, and ROE is 18.10 percent. What is the amount of the firm's net fixed assets?

a) $6,617.32
b) $10,403.31
c) $7,567.32
d) $3,544.99
e) $9,168.31

Answer 1

The amount of the firm's net fixed assets is not provided in the given information.

Step-by-step explanation:

The formula for net fixed assets is:

Net Fixed Assets = Total Assets - Current Assets

Given that the current ratio is 1.30 and current liabilities are $950, we can determine that current assets are:

Current Assets = Current Ratio * Current Liabilities

Substituting the given values, we get:

Current Assets = 1.30 * $950 = $1235

Since the long-term debt ratio is 0.70, we can determine that long-term debt is:

Long-Term Debt = Long-Term Debt Ratio * Total Assets

Substituting the given values, we get:

Long-Term Debt = 0.70 * Total Assets

From the formula for net fixed assets, we have:

Total Assets = Net Fixed Assets + Current Assets + Long-Term Debt

Substituting the given values and rearranging the equation:

Net Fixed Assets = Total Assets - Current Assets - Long-Term Debt

Substituting the known values:

Net Fixed Assets = (0.70 * Total Assets) - $1235 - (0.70 * Total Assets)

This simplifies to:

Net Fixed Assets = - $1235

Since the net fixed assets cannot be negative, the correct answer is none of the options provided.