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

question 32

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:
a. Calculate asset turnover, fixed asset turnover, and NWC turnover ratios.
b. Can the fixed asset turnover be considered appropriate and yet the total asset turnover be considered low by industry standards? How?
c. What in general might improve NWC turnover?

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Definitions:

Systematic Research

An organized method of investigation to explore, understand, or solve a problem, typically following a predefined protocol or plan.

Research Questions

Explicit queries designed to guide the process of investigation and generate knowledge or insights about a specific phenomenon.

OB Anchors

Represents the foundational principles or assumptions that guide the study and practice of organizational behavior, including the importance of evidence-based management and the recognition of individual differences.

Theory Development

The process of systematically formulating and organizing ideas to understand a particular phenomenon, often leading to hypothesis testing and further research.