What are the annual sales for a firm with $400,000 in debt, a total debt ratio of .4, and an asset turnover of 3?
A) $333,333
B) $1,200,000
C) $1,800,000
D)$3,000,000

Name: What are the annual sales for a firm with $400,000 in debt, a total debt ratio of .4, and an asset turnover of 3? A) $333,333 B) $1,200,000 C) $1,800,000 D)$3,000,000
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Quizplus · Accepted Answer

Total debt ratio = Total debt/Total assets, so:Assets = $400,000/.4 = $1,000,000Asset turnover ratio = Sales/Total assets, so:Sales = $1,000,000 × 3 = $3,000,000

What Are the Annual Sales for a Firm with $400,000