During the year 2015, Sanchez Corp. sold goods and earned revenue of $16,000,000. The company's beginning total assets was $8,000,000. Its assets turnover ratio was 1.6 times. Calculate the ending total assets of Sanchez.

Question

Quizplus · Accepted Answer

The asset turnover ratio is calculated as Revenue / Average Total Assets. Given the ratio is 1.6 and revenue is $16,000,000, the average total assets are $16,000,000 / 1.6 = $10,000,000. With beginning assets of $8,000,000, the ending assets can be calculated as (2 * $10,000,000) - $8,000,000 = $12,000,000.

During the Year 2015, Sanchez Corp