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16 March, 06:51

You have the following information on Olivia's Bridle Shop: total liabilities and equity = $65 million, current liabilities = $10 million, inventory = $15 million, and quick ratio = 3 times. Using this information, what is the balance for fixed assets on Olivia's balance sheet? $40m. $20m. $45m. $135m.

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  1. 16 March, 07:21
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    Total Fixed Assets = 20 million

    Explanation:

    Total liabilities and equity = $65 million

    Current liabilities = $10 million

    Inventory = $15 million

    Quick ratio = 3 times.

    As we know

    Total liabilities and equity = Total Assets

    65 Million = Total Fixed Assets + Total Current Assets

    65 Million = Total Fixed Assets + 45 million

    Total Fixed Assets = 65 million - 45 million

    Total Fixed Assets = 20 million

    Quick Ratio = (Total Current Assets - Inventory) / Total Current Liabilities

    3 = (Total Current Assets - 15 million) / $10 Million

    3 x $10 Million = Total Current Assets - 15 million

    30 million = Total Current Assets - 15 million

    30 million + 15 million = Total Current Assets

    Total Current Assets = 45 Million
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