Question

The following financial ratios and calculations were based on information from Kohl Co.'s financial statements for the current year. Accounts receivable turnover Ten times during the year Total assets turnover Two times during the year Average receivables during the year $200,000 What were Kohl's average total assets for the year?

Answer 1

Answer:

Kohl's Average total Assets were $1,000,000

Explanation:

1.

Asset Turnover = Net Sales / Average fixed Assets

Net Sales = Asset Turnover x Average fixed Assets

2.

Account Receivable Turnover = Net Sales / Average Account receivable

Net Sales = Account Receivable Turnover x Average Account receivable

According to given condition

Asset Turnover x Average fixed Assets = Account Receivable Turnover x Average Account receivable

2 X Average fixed Assets = 10 X $200,000

Average fixed Assets = $2000,000 / 2

Average fixed Assets = $1,000,000