A firm has sales of $1,140, net income of $218, net fixed assets of $528, and current assets of $284. The firm has $93 in inventory. What is the common-size balance sheet value of inventory

The answer is 11.45%

Explanation:

Solution

Given that:

Firm sales = $1,140

The net income = $218

Net fixed assets = $528

The firm's inventory = $93

The next step is to find the common-size balance sheet value of inventory

Now,

The common size value of inventory would be value of inventory divided by total value of assets.

So,

Total assets=current assets+net fixed assets

=$528+$284 = $812

Therefore,

The common size value of inventory = inventory/Total assets

$93/$812

=11.45%