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15 October, 04:44

The Harrisburg Store has net working capital of $2,715, net fixed assets of $22,407, sales of $31,350, and current liabilities of $3,908. How many dollars' worth of sales are generated from every $1 in total assets

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  1. 15 October, 07:17
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    1.08 dollars of sales are generated from every $1 in total assets.

    Explanation:

    Calculate Current asset from net working capital formula:

    Net Working capital = Current Assets - Current Liabilities

    $2,715 = Current Assets - $3,908

    Current Assets = $2,715 + $3,908

    Current Assets = $6,623

    Now calculate Total Assets:

    Total Assets = Fixed Asset + Current Assets

    Total Assets = $22,407 + $6,623

    Total Assets = $29,030

    We can calculate dollars' worth of sales are generated from every $1 in total assets by following formula:

    Asset turnover ratio = Net Sales / Total Assets

    Asset turnover ratio = $31,350 / $29,030 = 1.08
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