Asked by Allyssa Wilson on Jun 11, 2024
Verified
Bountiful Company had sales of $650,000 and cost of merchandise sold of $200,000 during the year. The total assets balance at the beginning of the year was $175,000 and at the end of the year was $167,000. Calculate the ratio of sales to total assets.
A) 3.00
B) 3.80
C) 0.29
D) 0.26
Sales to Total Assets Ratio
A financial ratio that measures a company's ability to use its assets to generate sales, calculated by dividing sales by total assets.
Cost of Merchandise Sold
The total cost incurred to purchase or produce the goods sold by a company during a specified period, directly affecting the gross profit.
- Comprehend the calculation and significance of ratios related to sales and total assets for performance evaluation.
Verified Answer
GB
Glenn BrownJun 15, 2024
Final Answer :
B
Explanation :
Sales to Total Assets Ratio = Sales / Total Assets
Sales = $650,000
Total Assets at the beginning of the year = $175,000
Total Assets at the end of the year = $167,000
Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2
= ($175,000 + $167,000) / 2
= $171,000
Sales to Total Assets Ratio = $650,000 / $171,000
= 3.80
Therefore, the correct answer is B) 3.80.
Sales = $650,000
Total Assets at the beginning of the year = $175,000
Total Assets at the end of the year = $167,000
Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2
= ($175,000 + $167,000) / 2
= $171,000
Sales to Total Assets Ratio = $650,000 / $171,000
= 3.80
Therefore, the correct answer is B) 3.80.
Learning Objectives
- Comprehend the calculation and significance of ratios related to sales and total assets for performance evaluation.
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