Homework Answers
Given total asset turnover rate = 1.52 = sales/total assets => Sales = 1.52*total assets
Fixed assets turnover ratio = 3.04 = sales/Fixed assets. => sales = 3.04*fixed assets
we know that total assets = Fixed assets + current assets.
So 1.52*(fixed assets+current assets) = 3.04* fixed assets
=> current assets = fixed assets.
So statement D is correct.
Statement A is false as company with TAT of 1.75 is generating more sales with sales assets so this company is more efficient.
Statement B is false as sales equal 304% of fixed assets.
Statement C is false as sales are 1.52 times of total assets.
Statement E is false as firm has $1.52 in sales for every $1 in total assets.
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