Muffin's Masonry, Inc

question 48

Multiple Choice

Muffin's Masonry, Inc.'s balance sheet lists net fixed assets as $16 million. The fixed assets could currently be sold for $17 million. Muffin's current balance sheet shows current liabilities of $5.5 million and net working capital of $6.5 million. If all the current accounts were liquidated today, the company would receive $10.25 million cash after paying $5.5 million in liabilities. What is the book value of Muffin's Masonry's assets today? What is the market value of these assets?

• A) Book Value: $28m; Market Value: $32.75m
• B) Book Value: $32m; Market Value: $42.25m
• C) Book Value: $32m; Market Value: $32.75m
• D) Book Value: $28m; Market Value: $42.25m

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Definitions:

Accounts Receivable

Money owed to a business by its customers for products or services delivered on credit.

Inventory

Refers to the goods and materials a business holds for the purpose of resale or production.

Statement Of Cash Flows

A financial report that summarizes the amount of cash and cash equivalents entering and leaving a company.

Operating Activities

The day-to-day activities of a business that are directly related to its principal revenue-generating operations, such as sales and service delivery.