FPL Co has current assets of 180,000 (cash: 20,000, accounts receivable: 70,000, inventory: 90,000), and long-term assets that had an amount of 400,000, exclusive of accumulated depreciation worth 180,000. Sales were 500,000, and operating profit was 50,000. Tax was 20,000 and interest paid was 10,000. Their total asset turnover ratio is:Select one:a.1.75b.1.5c.1.25d.2.00
Question
FPL Co has current assets of 180,000 (cash: 20,000, accounts receivable: 70,000, inventory: 90,000), and long-term assets that had an amount of 400,000, exclusive of accumulated depreciation worth 180,000. Sales were 500,000, and operating profit was 50,000. Tax was 20,000 and interest paid was 10,000. Their total asset turnover ratio is:Select one:a.1.75b.1.5c.1.25d.2.00
Solution
To calculate the total asset turnover ratio, we first need to determine the total assets of FPL Co.
Total assets = Current assets + Long-term assets - Accumulated depreciation Total assets = 180,000 (current assets) + 400,000 (long-term assets) - 180,000 (accumulated depreciation) Total assets = 400,000
The total asset turnover ratio is calculated by dividing the company's total sales by its total assets.
Total asset turnover ratio = Total sales / Total assets Total asset turnover ratio = 500,000 (total sales) / 400,000 (total assets) Total asset turnover ratio = 1.25
So, the correct answer is c. 1.25.
Similar Questions
FPL Co has sales of 500,000, operating profit of 50,000, interest expense of 10,000, tax expense of 20,000, total equity of 125,000 and total debt of 275,000. Their debt to assets ratio is:Select one:a.72.75%b.58.25%c.68.75%d.70%
A company commenced business on 1 July 2022. On 30 June 2023, an extract of the statement of financial position prepared for internal purposes, but excluding the effect of income tax, disclosed the following information: AssetsLiabilitiesCash$20,000Accounts Payables$50,000Inventories60,000Provision for annual Leave8,000Plant200,000 Accumulated Depreciation(20,000) Additional information: The plant was acquired on 1 July 2022. Depreciation for accounting purposes was 10% (straight-line method), while 20% (straight-line) was used for tax purposes. The tax rate is 30%.The deferred tax liability and deferred tax asset are:Group of answer choicesDTL = $2,400 and DTA = $6,000DTL = $20,000 and DTA = $8,000DTL = $8,000 and DTA = $20,000DTL = $6,000 and DTA = $2,400
PFL Co has sales of 500,000, operating profit of 50,000, interest expense of 10,000, tax expense of 20,000, total equity of 125,000 and total debt of 275,000. Their return on equity is:Select one:a.16%b.10%c.12%d.18%
The balance sheet shows the following accounts and amounts:Cash $26,000; Short-term Debt $42,000; Buildings and Equipment $840,000; Inventory, $88,000; Notes Payable $120,000; Accumulated Depreciation $220,000; Common Stock $160,000; Accounts Receivable $76,000; Retained Earnings $474,000; Accounts Payable $34,000.Total assets on the balance sheet are:Multiple Choice$1,030,000.$734,000.$1,250,000.$810,000.
The following amounts were reported on the December 31, 2022, balance sheet:Retained earnings $ 140,000Buildings and equipment, net of accumulated depreciation 150,000Accounts receivable 38,000Common stock 20,000Wages payable 5,000Cash 13,000Land 60,000Accounts payable 25,000Bonds payable 90,000Merchandise inventory 24,000The current ratio at December 31, 2022 was:
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.