Question
The Arkham Company has a ratio of long-term debt to long-term debt plus equityof .34 and a current ratio of 1.6. Current liabilities are $900,
The Arkham Company has a ratio of long-term debt to long-term debt plus equityof .34 and a current ratio of 1.6. Current liabilities are $900, sales are $6,320, profit margin is 9.1 percent, and ROE is 19.5 percent. What is the amount of the firm's net fixed assets?
I get to the long term debt part then cant figure out the equations.
current assets= current ratio x curr. liab
1.6x 900= 1,440.00
ni= pm x sales
.091 x 6320= 575.12
equity= ni/roe
575.12/.195= 2949.33
long term debt
.34 = ltd/(ltd+ equity)
.34= ltd/(ltd+ 2949.33)
.34(ltd+ 2949.33)= ltd
This is where I am stuck on how to proceed.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started