1.You have been hired by ABC Company to determine the total market value of its

Question

1.You have been hired by ABC Company to determine the total market value of its assets. You started off by looking at its current Balance Sheet. Total assets, cash and receivables are $23,000, $3,000 and $4,200 respectively. Current market value of fixed assets is $17,400. The firm has some inventory worth $6,900 today. Assuming that these are all the firm’s assets, what is the outcome of your assessment?

2. Nike has the following end of year balances. Compute its long-term debt balance.

Cash $30 ,Accounts payable $20, Net fixed Asset $220, Inventory $90, Stockholder’s Equity $50, Accounts receivable $30

Explanation / Answer

1. Total market value of assets = Cash + Receivables + Current market value of fixed assets + Inventory

= 3,000 + 4,200 + 17,400 + 6,900

= 31,500

2. Long term debt balance = Net fixed assets - Accounts payable - Stock holder's equity

= 220 - 20 - 50

= 150.

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