Question

The Maurer Company has a long-term debt ratio of 35 and a current ratio of 1.50. Current liabilities are $910, sales are $6,330, profit margin is 9.2 percent, and ROE is 19.6 percent. What is the amount of the firm's net fixed assets? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

a) $1,548.39
b) $3,290.32
c) $2,661.29
d) $4,051.61

Answer 1

To determine the amount of the firm's net fixed assets, we need to use several formulas and calculations. However, the provided information is insufficient, as we are missing the value of intangible assets. Without this information, the amount of the firm's net fixed assets cannot be determined.

Step-by-step explanation:

To find the amount of the firm's net fixed assets, we need to use the formula:

Net Fixed Assets = Total Assets - Current Assets - Intangible Assets

Given the information provided:

Total Assets = Long-term Debt / Long-term Debt Ratio = Long-term Debt / 0.35

Current Assets = Current Ratio * Current Liabilities

To calculate Intangible Assets, we need additional information. Since the question does not provide it, we can assume that the firm has no intangible assets.

Using the given values, we can calculate:

Net Fixed Assets = (Long-term Debt / 0.35) - (1.50 * $910) - 0

Simplifying the equation:

Net Fixed Assets = (Long-term Debt / 0.35) - $1,365

Now, we need to solve for Long-term Debt:

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

Substituting in the given values:

Long-term Debt = 0.35 * (Long-term Debt / 0.35)

Simplifying:

Long-term Debt = Long-term Debt

This implies that the value of Long-term Debt can be any value. Therefore, the amount of the firm's Net Fixed Assets cannot be determined with the given information. The correct answer is: Not enough information provided.