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:

Operant Conditioning

A method of learning in which the force of a behavior is shaped by the use of rewards or sanctions.

Ethology

Emphasizes the evolutionary basis of behavior and its adaptive value in ensuring survival of a species.

Reinforcement

In psychology, the process of encouraging or establishing a pattern of behavior by offering rewards or consequences.

Hostile Conflict

Disputes characterized by anger, resentment, and aggression, which can be damaging to relationships.