Q9-6TI 聽Maxim Company reported beginni... [FREE SOLUTION]

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Chapter 9: Q9-6TI (page 517)

Maxim Company reported beginning and ending total assets of $140,000 and $160,000, respectively. Its net sales revenue for the year was $240,000. What was Maxim鈥檚 asset turnover ratio?

Short Answer

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Answer

Maxim鈥檚 asset turnover ratio is 1.6 times.

Step by step solution

Meaning of Asset turnover Ratio

The asset turnover ratio states how much a company can generate net sales revenue by using the total assets of the business.

Calculation of Asset turnover ratio

$A s s e t t u r n o v e r r a t i o = \frac{N e t s a l e s r e v e n u e}{A v e r a g e t o t a l a s s e t s} = \frac{$ 240, 000}{$ 150, 000} = 1.6 t i m e s$

$A v e r a g e t o t a l A s s e t s = \frac{A s s e t s a t t h e b e g e n n i n g + A s s e t s a t t h e e n d}{2} = \frac{$ 140, 000 + $ 160, 000}{2} = $ 150, 000$

$A s s e t t u r n o v e r r a t i o = \frac{N e t s a l e s r e v e n u e}{A v e r a g e t o t a l a s s e t s} = \frac{$ 240, 000}{$ 150, 000} = 1.6 t i m e s$

$A v e r a g e t o t a l A s s e t s = \frac{A s s e t s a t t h e b e g e n n i n g + A s s e t s a t t h e e n d}{2} = \frac{$ 140, 000 + $ 160, 000}{2} = $ 150, 000$

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91影视

Maxim Company reported beginning and ending total assets of \(140,000 and \)160,000, respectively. Its net sales revenue for the year was $240,000. What was Maxim鈥檚 asset turnover ratio?

Short Answer

Step by step solution

Meaning of Asset turnover Ratio

Calculation of Asset turnover ratio

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