Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Following is the economical balance sheet of Trend Private Ltd which manufactures denim fabric. Capital Employed Amount (in ) Invested Capital Amount (in ) Operating

Following is the economical balance sheet of Trend Private Ltd which manufactures denim fabric.

Capital Employed

Amount

(in )

Invested Capital

Amount

(in )

Operating assets Owners equity
Net fixed assets 3,50,000 Equity share capital 5,00,000
Operating working capital 1,50,000 Reserve and surplus 40,000
Non-operating assets Debt
Cash 1,20,000 Long-term debt 80,000
Total 6,20,000 Total 6,20,000

LNJ Ltd, a manufacturer of jeans, wants to acquire Trend Private Ltd. LNJ is planning to stop Trend's business after the acquisition.

The machines of Trend Private Ltd can be sold in the market for 1,00,000. The realisable value from working capital is coming out to be 50,000.

Based on this information, what will be the value of the operating assets of Trend Private Ltd from the perspective of LNJ Ltd?

Options are :

10,000

1,00,000

1,50,000

90,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management For Nurse Managers Merging The Heart With The Dollar

Authors: J. Michael Leger

5th Edition

1284230937, 9781284230932

More Books

Students also viewed these Finance questions

Question

How are a companys social responsibility efforts measured?

Answered: 1 week ago