Question

Use the following information to answer this question. Bayside, Inc. 2017 Income Statement ($ in thousands) Net sales $ 5,870 Cost of goods sold 4,270 Depreciation 335 Earnings before interest and taxes $ 1,265 Interest paid 31 Taxable income $ 1,234 Taxes 432 Net income $ 802 Bayside, Inc. 2016 and 2017 Balance Sheets ($ in thousands) 2016 2017 2016 2017 Cash $ 85 $ 190 Accounts payable $ 1,455 $ 1,420 Accounts rec. 960 800 Long-term debt 760 560 Inventory 1,565 2,010 Common stock 3,185 3,230 Total $ 2,610 $ 3,000 Retained earnings 830 1,080 Net fixed assets 3,620 3,290 Total assets $ 6,230 $ 6,290 Total liab. & equity $ 6,230 $ 6,290 How many dollars of sales were generated from every dollar of fixed assets during 2017?

Answer 1

Answer: $1.70

Explanation:

For us to know the amount of dollars of sales were generated from every dollar of fixed assets during 2017, we first find the average fixed assets and this will be:

= (3,620 + 3,290) / 2

= 6910/2

= 3455

Then , the dollars of sales generated from the fixed assets will be:

= Net sales / 3455

= 5870 / 3455

= 1.70