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8 March, 16:05

At the end of 2014, Stacky Corp. had $500,000 in liabilities and a debt-to-assets ratio of 0.5. For 2014 Stacky had an asset turnover of 3.0. What were annual sales for Stacky in 2014? A. $333,333 B. $1,200,000 C. $1,800,000 D. $3,000,000 E. None of the above

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  1. 8 March, 16:11
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    Answer: D. $3,000,000

    Explanation:

    Asset turnover is the ratio of total sales or revenue to average assets

    Debt to asset ratio is total liabilities divided by total assets.

    Total liability is $500,000

    Debt to asset ratio is total liability/total asset = 500,000/total asset = 0.5

    Total asset = 500,000 x 10/5

    Total asset = 1,000,000

    Asset turn over = total sales/average asset

    Assets turnover = 3.0

    3.0 = total sales/1,000,000

    3.0 = total sales/1,000,000

    Total sales = 3.0 x 1,000,000

    Total sales = 3,000,000
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