A Firm Only Has Current Assets and Fixed Assets

question 69

Multiple Choice

A firm only has current assets and fixed assets. Its current assets are $100,000 and total assets are $300,000. The firm's sales are $900,000. The firm's fixed asset turnover is

• A) 4.5x.
• B) 12.0x.
• C) 2.4x.
• D) 5.0x.

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Definitions:

Payback Period

The duration of time it takes for an investment to generate an amount of income or cash flow equal to the cost of the investment.

Salvage Value

The estimated residual value of an asset at the end of its useful life.

Old Equipment

Refers to machinery or technology that has become outdated or has surpassed its effective service life but may still be in use.

Salvage Value

The projected remaining worth of an asset once it has reached the end of its operational lifespan.