Le Bleu Co. has a ratio of long-term debt to total assets of .40 and a

QUESTION

Le Bleu Co. has a ratio of long-term debt to total assets of .40 and a current ratio of 1.30. Current liabilities are $900, sales are $5,320, profit margin is 9.4 percent, and ROE is 18.2 percent. What is the amount of the firms net assets?
Long-term debt to total assets = .40 Current Ratio = 1.30 = Current assets / current liabilities 1.30 = c.a/ $900 Current assets = $1,170 Profit Margin = 9.4 % = profit / sales .094 = profit / $5,320 profit = $500.08 ROE = 18.2% = Profit / shareholder equity .182 = $500.08/sharehoder equity shareholder equity = $2747.69 = Firms net Assets Long term debt = 0.40 Total Assets = 1 .40 = 0.60

hareholder Equity Current Liability Long term debt = Total Assets $2747.69 $900 0.40x = 0.60X x = $18,238.45 Long term debt = .40 * $18,238.45 = $7,295.38 Long term asset = .60 * $18,238.45 = $10,943.07 Firms Net Assets = Total Assets Long Term debt = $2747.69

ANSWER:

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