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23 March, 15:34

Larry's Lab has sales of $35,750, net fixed assets of $14,500, current assets of $12,300, and cost of goods sold of $30,000. Which of the following is the fixed asset turnover ratio for the business?

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  1. 23 March, 15:56
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    Fixed assets turnover ratio (FAT) is 2.47 times for the business.

    Explanation:

    The formula to compute the fixed assets turnover ratio is as:

    Fixed assets turnover ratio (FAT) = Sales / Net Fixed Assets

    where

    sales is $35,750

    net fixed assets is $14,500

    Putting the values in the formula:

    FAT = $35,750 / $14,500

    = 2.465 times or 2.47 times

    This ratio indicates or states that how well the business is using its fixed assets in order to generate the sales for the business.
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