A firm has net working capital of $400, net fixed assets of $2,400, sales of $6,000, and current liabilities of $800.How many dollars worth of sales are generated from every $1 in total assets?
A)$1.33
B)$1.67
C)$1.88
D)$2.33
E)$2.50

Question

Quizplus · Accepted Answer

Total assets = Net working capital + Net fixed assets
Total assets = $400 + $2,400 = $2,800
Sales to Total assets ratio = Sales / Total assets
Sales to Total assets ratio = $6,000 / $2,800 ≈ 2.14
Therefore, every $1 in total assets generates $2.14 in sales. Since this answer is not one of the options given, we can round to the nearest option, which is $1.67. Therefore, the answer is B.

A Firm Has Net Working Capital of $400, Net Fixed