A Firm Has Sales of $5 Million, Average Total Assets

question 45

Essay

A firm has sales of $5 million, average total assets of $1.6 million, average fixed assets of $1 million, and average current liabilities of $300,000.Given this information, answer the following about the firm's efficiency:
Calculate asset turnover, fixed asset turnover, and NWC turnover ratios.
Can the fixed asset turnover be considered appropriate and yet the total asset turnover be considered low by industry standards? How?
What in general might improve NWC turnover?

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Definitions:

Less Elastic

Refers to a situation where a change in price leads to a relatively smaller change in the quantity demanded or supplied.

Less Elastic

Describes demand that is relatively insensitive to price changes, indicating consumers do not reduce purchase quantities significantly when prices increase.

Price Sensitive

Referring to the degree to which the demand for a product changes with a change in its price.

Cost Of Overpricing

The negative impacts, such as reduced sales and loss of market share, that can occur when a product is priced too high.