43

Following is information relating to Watson, Inc. Assume that all balance sheet accounts represent both average and ending balance figures and that all sales were on credit. $ Assets Cash and short-term investments Accounts receivable (net) Merchandise inventory Property, plant, and equipment Total assets 30,000 20,000 15,000 185,000 250,000 $ Liabilities and Stockholders' Equity Current liabilities $ 45,000 Long-ter liabilities 70,000 Stockholders' equity - common 135,000 Total liabilities and stockholders' equity $ 260,000 $ Income Statement Sales Cost of merchandise sold Gross profit Operating expenses Interest expense Net income $ 85,000 45,000 40,000 (15,000) (5,000) 20,000 $ Number of shares of common stock outstanding Market price of common stock Total dividends paid Net cash flows from operating activities 6,000 $ 20 $ 9,000 $ 30,000 LUNYI HUMOS Stockholders' equity - common Total liabilities and stockholders' equity $ vy 135,000 250,000 Income Statement Sales Cost of merchandise sold Gross profit Operating expenses Interest expense Net income $ 85,000 45,000 40,000 (15,000) (5,000) 20,000 $ 20 Number of shares of common stock outstanding 6,000 Market price of common stock $ Total dividends paid $ 9,000 Net cash flows from operating activities $ 30,000 Using the data provided, what is the asset turnover for Watson, Inc.? a) 1.00 b) 2.94 c) 0.18 d) 0.34