Question

A firm has sales of $1,210, net income of $225, net fixed assets of $542, and current assets of $298. The firm has $100 in inventory. What is the common-size balance sheet value of inventory

Answer 1

Answer:

11.90%

Explanation:

Given that,

Sales of the firm = $1,210

Net income = $225

Net fixed assets = $542

Current assets = $298

Inventory = $100

Total assets:

= Net fixed assets + Current assets

= $542 + $298

= $840

Common-size balance sheet value of inventory:

= Inventory ÷ Total assets

= $100 ÷ $840

= 0.1190 or 11.90%