Downer Engineering has sales of $20 million, total debt of $1.5 million and a debt ratio of 40%.What is Downer's total asset turnover?
A)13.33
B)9.11
C)6.55
D)5.33

Question

Quizplus · Accepted Answer

First, we need to calculate total assets:

Total Debt = Debt Ratio x Total Assets
$1.5 million = 40% x Total Assets
Total Assets = $3.75 million

Next, we can calculate total asset turnover:

Total Asset Turnover = Sales / Total Assets
Total Asset Turnover = $20 million / $3.75 million
Total Asset Turnover = 5.33

Therefore, the answer is D) 5.33.

Downer Engineering Has Sales of $20 Million, Total Debt of $1.5