Question

Little Deer Industries gathered the following year-end data (in thousands) for 2010 and 2009: 2010 2009...

Little Deer Industries gathered the following year-end data (in thousands) for 2010 and 2009:

2010

2009

Current Assets

$525

$465

Long-Term Assets

885

585

Current Liabilities

385

385

Long-Term Liabilities

575

575

Owners' Equity

575

265

Net Sales

975

775

Gross Margin

485

365

Net Income

255

100

a) What was the asset turnover ratio for 2010?

b) What was the current ratio at the end of 2010?

Homework Answers

Answer #1

a) The  asset turnover ratio for 2010 = Net Sales / Average Total Assets

= Net Sales / [ ( 2010 Assets + 2009 Assets)/2]

= $ 975 / [( $ 1,410+ $ 1,050) /2 ]

= 975 / 1230

= 0.792682926

Hence the correct answer is 0.79

Note:

2010 2009
Current Assets 525 465
Long-Term Assets 885 585
Total Assets (Current Assets+Long-Term Assets) 1410 1050

b. The current ratio at the end of 2010 = Current Assets for 2010/ Current Liabilities for 2010

= $525 / 385

= 1.36

Hence the correct answer is 1.36

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