Ratio of Current to Total Assets
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Can you explain how to do this, I cannot find it in the text. The firm's initial ratio of current to total asset is ? See attached table.
Plum Packages Inc
Assets Liabilities and Equity
Currents assets $10,000 Current liabilites $5,000
Fixed assets 20,000 Long term debt 12,000
Equity 13,000 Equity 13,000
Total 30,000 Total 30,000
The company earns 5% on currents assets and 15% on fixed assets. The firm's current liabilites cost 7% to maintain and the average annual cost of long term funds is 20%
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Solution Summary
This solution contains step-by-step calculations to determine the firm's initial ratio of current to total assets with the information provided.
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