Question

Muffin’s Masonry, Inc.’s balance sheet lists net fixed assets as $26 million. The fixed assets could currently be sold for $43 million. Muffin’s current balance sheet shows current liabilities of $11.5 million and net working capital of $10.5 million. If all the current accounts were liquidated today, the company would receive $7.85 million cash after paying the $11.5 million in current liabilities. What is the book value of Muffin’s Masonry’s assets today and the market value of these assets? (Enter your answer in millions of dollars rounded to 2 decimal places.)

	BOOK VALUE MARKET VALUE (in millions of dollars) Current assets Fixed assets Total $0.00 $0.00

Answer 1

Book Value of Assets:

Current Assets = Net Working Capital + Current Liabilities
Current Assets = $10.50 million + $11.50 million
Current Assets = $22.00 million

Total Assets = Current Assets + Net Fixed Assets
Total Assets = $22.00 million + $26.00 million
Total Assets = $48.00 million

Market Value of Assets:

Current Assets = Proceed from Current Assets + Current Liabilities
Current Assets = $7.85 million + $11.50 million
Current Assets = $19.35 million

Total Assets = Current Assets + Net Fixed Assets
Total Assets = $19.35 million + $43.00 million
Total Assets = $62.35 million