please help… WLH corporation reported a fixed asset turnover ratio of 1.50 and gross profit margin ratio of 12%. reported average fixed assets were 4.5 billion. compute COGS. please explain

COGS is the brother of dogs 4,5*1,5= 6,75

cfaisok 6.75 is sales, i figured that one out also because fixed asset turnover =net sales/fixed assets so … 1.50 = x/4.5 billion therefore, net sales = 6.75 billion, but how do you get cogs

5.94?

toronto19821 Wrote: ------------------------------------------------------- > cfaisok > > 6.75 is sales, i figured that one out also > because fixed asset turnover =net sales/fixed > assets > so … 1.50 = x/4.5 billion > therefore, net sales = 6.75 billion, > but how do you get cogs from gross margin ratio

6.75 x gross profit margin (12%)

sorry i was joking and have to go to bed now…

Sales / Avg Fixed Assets = 1.5 Sales = 4500 * 1.5 (6750 - COGS)/(6750) = 0.12 solve for cogs in $million edit; beaten by a longshot

easy one 3 steps 1) back into sales using the FAT ratio FAT = sales/FA 1.5 = x/4.5 sales = 6.75 2) step 2 is to get GP using the GM % we got. 6.75 * .12 = GP of .81 3) solve for CGS knowing that revs - COGS = GP 6.75 - ??? = .81 I got 5.94 boom

lets play with the FAT first,

FAT = Sales/Avg. FA

=> 1.5 = Sales/4.5 billion

=> Sales = 1.5 * 4.5 billion = 6.75 billion

Now, if gross profit margin is 12%, that means rest 88% is the COGS itself.

so, COGS = 88% of Sales = 5.94 billion.

lets play with the FAT first,

FAT = Sales/Avg. FA

=> 1.5 = Sales/4.5 billion

=> Sales = 1.5 * 4.5 billion = 6.75 billion

Now, if gross profit margin is 12%, that means rest 88% is the COGS itself.

so, COGS = 88% of Sales = 5.94 billion.