Predator Punks Inc. has current assets of $14,000, net fixed assets of $32,500, current liabilities of $13,400, and long-term debt of $16,800.
a. What is the value of the shareholder's equity account for this firm?
b. How much is net working capital?
In finance, capital structure refers to the composition of debts versus equities in financing a firm's total assets. One commonly used statistics that describes a firm's capital structure is the debt-equity ratio. A firm's capital structure can have important implications for its cost of capital and firm value.
Answer and Explanation:
a. Shareholder's equity is $16,300.
Shareholder's equity is total assets minus total liabilities, i.e.,
- shareholder's equity = total asset - total...
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fromChapter 5 / Lesson 22
To operate effectively, businesses must be able to pay their bills as they become due. The best way to determine a business' ability to pay its bills is to calculate its net working capital. Learn what net working capital is and how to calculate it in this lesson.