Orem Corporation's current liabilities are $116,160, its long-term liabilities are $474,240, and its working capital is $162,600. If the corporation's debt-to-equity ratio is 0.24, total long-term assets must equal Chegg a $2.460,000 b $2,287640 c $2.887,800 d $2,771,640

Question

Braeden Ritter

Business

15 April, 09:56

Orem Corporation's current liabilities are $116,160, its long-term liabilities are $474,240, and its working capital is $162,600. If the corporation's debt-to-equity ratio is 0.24, total long-term assets must equal Chegg a $2.460,000 b $2,287640 c $2.887,800 d $2,771,640

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Dalton Carey · Answer 1

Total long-term assets must equal: d $2,771,640

Explanation:

Orem Corporation's Total Debt (liabilities) = current liabilities + long-term liabilities = $116,160 + $474,240 = $590,400

Debt-to-equity ratio = Total Debt/Total Equity

Total Equity = Total Debt/Debt-to-equity ratio = $590,400/0.24 = $2,460,000

Working capital = Current assets - Current abilities

Current assets = Working capital + Current abilities = $162,600 + $116,160 = $278,760

Basing accounting equation:

Total assets = Current assets + Long-term assets = Total liabilities + Total Equity = $590,400 + $2,460,000 = $3,050,400

Long-term assets = Total assets - Current assets = $3,050,400 - $278,760 = $2,771,640