Stone Walls has a long-term debt ratio of. 6 and a current ratio of 1.2. Current liabilities are $800, sales are $7,800, the profit margin is 6.5 percent, and return on equity is 15.5 percent. What is the amount of the firm's net fixed assets?

Question

Kian Orozco

Business

7 October, 19:09

Stone Walls has a long-term debt ratio of. 6 and a current ratio of 1.2. Current liabilities are $800, sales are $7,800, the profit margin is 6.5 percent, and return on equity is 15.5 percent. What is the amount of the firm's net fixed assets?

+1

Answers (1)

Know the Answer?

Kaelyn Frey · Answer 1

The answer is $8017.43

Explanation:

current ratio = current assets/current liabilities=1.2*800=$960

Net income = 0.65 * 7800=$507

return on equity = net income / total equity=507/0.155=$3270.97

Long term debt ratio = Long term debt / (Long term debt + total equity)

0.6 = Long term debt / Long term debt + $3270.97 = $4906.46

Total debt = 800 + 4906.46 = $5706.46

Total assets = $5706.46 + $3270.97 = $8977.43

Net fixed assets = $8977.43 - $960 = $8017.43