Le Blue Company's Net Fixed Assets
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The Le Blue Company has a ratio of long-term debt to total assets of 0.70 and a current ratio of 1.20. Current liabilities are $850, sales are $4,310, profit margin is 9.5 percent, and Return of Equity (ROE) is 21.5 percent. What is the amount of the firm's net fixed assets?
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Solution Summary
The solution determines net fixed assets given certain financial ratios.
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The accounting equation is: Assets = Liabilities + Equity
Asset=Fixed Assets + Current Assets
Liabilities=Current Liabilities + Long Term Debt
So, we have the accounting equation written a different way:
Fixed Assets + Current Assets = Current Liabilities + Long Term Debt + Equity
If Long Term Debt to Total Assets=0.7, then Long Term Debts= 0.7(Total ...
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