The Maurer Company has a long-term debt ratio of .60 and a current ratio of 1.70. Current liabilities are $920, sales are $5,160, profit margin is 9.50 percent, and ROE is 18.50 percent. What is the amount of the firm's net fixed assets?

The amount of the firm's net fixed assets $7,361.

Explanation:

Long term debt ratio = 0.60

Current Ratio = Current Assets / Current Liabilities

1.70 = Current Assets / 920

$920 x 1.70 = Current Asset

Current Assets = $1,564

Profit margin = Net profit / sales

9.50% = Net profit / 5,160

Net profit = 0.0950 x 5,160

Net profit = $490.2

Return on equity = Net profit / Shareholder's Equity

18.50% = 490.2 / shareholder's equity

Shareholder's Equity = 490.2 / 0.018.5

Shareholder's Equity = $2,650

Suppose

Total Assets = A

Using Accounting Equation

Asset = Liabilities + Equity

A = ( 0.6A + $920 ) + $2,650

A = 0.6A +920 + 2650

A = 0.6A + 3570

A - 0.6A = 3570

0.4A = 3570

A = 3570 / 0.4

A = 8,925

Total Assets = $8,925

Fixed Assets = 8925 - 1564

Fixed Assets = $7,361

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