Jim Short’s Company makes clothing for schools. Sales in 20X1 were $4,370,000. Assets were as follows:

Cash	$ 175,000
Accounts receivable	809,000
Inventory	447,000
Net plant and equipment	501,000
Total assets	$ 1,932,000
Compute the following:

Note: Round your answers to 2 decimal places.


Let's calculate the ratios based on the provided information:

### 1. **Asset Turnover Ratio:**
This ratio shows how efficiently the company uses its assets to generate sales.

\[
\text{Asset Turnover Ratio} = \frac{\text{Sales}}{\text{Total Assets}}
\]

Given:
- Sales = $4,370,000
- Total Assets = $1,932,000

Substituting the values:

\[
\text{Asset Turnover Ratio} = \frac{4,370,000}{1,932,000}
\]

Let's calculate this.The **Asset Turnover Ratio** is $ 2.26 $.

Would you like to compute more ratios or any other details related to this, such as Return on Assets (ROA) or Profit Margin? Here are five related questions that might expand your understanding:

1. How does an asset turnover ratio of 2.26 compare to industry averages?
2. What would be the impact on the ratio if total assets were to increase next year?
3. How can the company improve its asset turnover ratio?
4. What other financial metrics should be analyzed alongside the asset turnover ratio?
5. How would seasonal fluctuations affect Jim Short’s asset turnover ratio?

**Tip:** A higher asset turnover ratio typically indicates efficient use of assets, but it should be compared to industry norms for meaningful insights.

Jim Short’s Company makes clothing for schools. Sales in 20X1 were $4,370,000. Assets were as follows:

Cash $175,000
Accounts receivable $809,000
Inventory $447,000
Net plant and equipment $501,000
Total assets $1,932,000
Compute the following:
Note: Round your answers to 2 decimal places.

Learn how to calculate the asset turnover ratio for Jim Short’s Company with sales of $4,370,000 and total assets of $1,932,000. This problem helps understand how efficiently the company uses its assets to generate revenue, covering key financial metrics and ratios.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation