Question

During​ 2018, Landers Corp. had net sales of $17,000,000. The beginning total assets were $8,600,000. The asset turnover ratio was 1.5 times. Calculate the ending total assets of Landers.​(Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

A)14,266,667
B)5,666,667
C)14,066,666
D)8,600,000

Answer 1

Answer:

The ending total assets of Landers: C)14,066,666

Explanation:

Asset turnover ratio is calculated by using following formula:

Asset Turnover ratio =  Total Net Sales or Revenue/ Average Total Assets

Average Total Assets  = Total Net Sales or Revenue/Asset Turnover ratio

In where:

Average Total Assets = (Beginning Total Assets + Ending Total Assets)/2

During​ 2018, Landers Corp. had net sales of $17,000,000 and the asset turnover ratio was 1.5 times.

Average Total Assets  = $17,000,000/1.5 = $11,333,333.33

Ending Total Assets = Average Total Assets x 2 - Beginning Total Assets = $11,333,333.33 x 2 - $8,600,000 = $14,066,666