A Firm Has Net Working Capital of $400, Net Fixed

question 32

Multiple Choice

A firm has net working capital of $400, net fixed assets of $2,400, sales of $6,000, and current liabilities of $800.How many dollars worth of sales are generated from every $1 in total assets?

• A)$1.33
• B)$1.67
• C)$1.88
• D)$2.33
• E)$2.50

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Definitions:

Receivable Turnover

A financial ratio that measures how efficiently a company collects its accounts receivable.

Inventory Turnover

A measure indicating the frequency at which a company's inventory is sold and replenished within a certain timeframe, reflecting the effectiveness of its inventory control.

Gross Profit

The difference between revenue and the cost of goods sold before deduction of overheads, payroll, taxation, and interest payments.

Price-Earnings Ratio

The price-earnings ratio (P/E ratio) is a valuation ratio of a company's current share price compared to its per-share earnings.