A firm's total equity is $10 million and total liabilities is $5 million. During the year, its sales equaled to $75 million. Based on the given information, the total assets turnover ratio of the firm is:
A)10.5 times.
B)13 times.
C)15 times.
D)7.5 times.
E)5 times.

Question

Quizplus · Accepted Answer

The total assets of the firm are the sum of total equity and total liabilities, which is $10 million + $5 million = $15 million. The total assets turnover ratio is calculated as sales divided by total assets, which is $75 million / $15 million = 5 times.

A Firm's Total Equity Is $10 Million and Total Liabilities