Calculate sales given the following data. Total fixed assets $400,000; long-term liabilities $155,000; total liabilities $280,000; total shareholders' equity $320,000; net working capital turnover 20.
A) $1,500,000
B) $1,700,000
C) $1,900,000
D) $2,100,000
E) $2,250,000

Question

Quizplus · Accepted Answer

Net working capital turnover = Sales / Net working capitalNet working capital = Total current assets - Total current liabilitiesTotal current assets = Total assets - Total fixed assets = $320,000 + $400,000 = $720,000Total current liabilities = Total liabilities - Long-term liabilities = $280,000 - $155,000 = $125,000Net working capital = $720,000 - $125,000 = $595,000Sales = Net working capital turnover * Net working capital = 20 * $595,000 = $1,500,000

Calculate Sales Given the Following Data