Capital intensity ratio: Dennis Compton, Inc., has total assets of $5,335,901 and a capital intensity of 53.9%. What is the firm's sales?

Question

Quizplus · Accepted Answer

Capital intensity ratio is the ratio of total assets to owner's equity. 
Capital Intensity Ratio = Total Assets / Owner's Equity
53.9% = $5,335,901 / Owner's Equity
Owner's Equity = $5,335,901 / 0.539 = $9,899,631
Sales = Total Assets - Owner's Equity = $5,335,901 - $9,899,631 = -$4,563,730 
Since sales cannot be negative, the answer is none of the above. However, if there was a positive option, it would be incorrect.

Capital Intensity Ratio: Dennis Compton, Inc