Answer:
For every $1 of total assets, $1.73 worth of sales are generated.
Explanation:
The dollars worth of sales generated for every $1 of total assets can be calculated using the Total Assets Turnover formula.
Total assets turnover = Net Sales / Net Total Assets
To calculate this, we need to find the value of total assets.
The working capital is made up of current assets less current liabilities.
Thus, the current assets will be = Current liabilities + net working capital
Current Assets = 820 + 510 = 1330
Total Assets = 1330 + 2256 = $3586
So total assets turnover = 6200 / 3586 = 1.7289 rounded off to 1.73.
Answer:
For every 1.73 dollars worth of sales are generated from every $1 in total Assets
Explanation:
The question asks us to calculate the Total Assets Turnover which measures the company's assets ability to generate sales
Given NWC = $510, NFA= $2256, Sales = $6200, CL = $820
TAT = Sales / Total Assets
Total Assets = NFA + CA
CA=?
Net working capital is the difference between a firms current assets with current liabilities
NWC = CA -CL
510 =CA - 820
CA = 510 + 820 = $1330
TA = 2256 +1330
=$3586
TAT = Sales / Total Assets=6200/3586 = 1.7289/1.73
This means that for every 1.73 dollar worth of sales are generated from every $1 in total Assets
