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Foundations Of Financial Management
Found in: Page 82
Foundations Of Financial Management

Foundations Of Financial Management

Book edition 16th
Author(s) Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Pages 768 pages
ISBN 9781259277160

Short Answer

The balance sheet for Stud Clothiers is shown below. Sales for the year were $2,400,000, with 90 percent of sales sold on credit.

Stud Clothier

Balance sheet 20X1

Assets

Liabilities and Equity

Cash

$60,000

Account payable

$220,000

Account receivable

240,000

Accrued taxes

30,000

Inventory

350,000

Bonds payable (long term)

150,000

Plant and equipment

410,000

Common stock

80,000

Paid in capital

200,000

Retained earnings

380,000

Total assets

$1,060,000

Total LIbilities and Equity

$1,060,000

Compute the following:

d. Assets turnover ratio.

The asset turnover ratio of the stud clothier company is 2.26.

See the step by step solution

Step by Step Solution

Asset turnover ratio 

The asset turnover ratio is computed to measure the efficiency of the company with which it is deploying its assets to generate the revenues.

Calculation of Assets turnover ratio 

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