Calculate sales given the following data. Total ﬁxed assets $400,000; long-term liabilities $155,000; total liabilities $280,000; total shareholders' equity $320,000; net working capital turnover 20.
A) $1,500,000
B) $1,700,000
C) $1,900,000
D) $2,100,000
E) $2,250,000

Question

Quizplus · Accepted Answer

Net working capital is calculated as total current assets minus total current liabilities. Given total liabilities of $280,000 and long-term liabilities of $155,000, current liabilities are $125,000. Shareholders' equity is $320,000, so total assets are $600,000. With fixed assets at $400,000, current assets are $200,000. Net working capital is $75,000 ($200,000 - $125,000). With a turnover of 20, sales are $1,500,000 ($75,000 * 20).

Calculate Sales Given the Following Data