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    Rangoon Corp - TATO

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    Rangoon Corp's sales last year were $400,000 and its year-end total assets were $300,000. The average firm in the industry has a total assets turnover of 2.5. The new CFO belives the firm has excess assets that can be sold so as to bring the TATO down to the industry average without affecting sales. By how much must the assets be reduced to bring the TATO to the industry average?

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    Solution Preview

    Rangoon Corp's sales = $400,000
    Rangoon Corp's year-end total assets = $300,000

    Total Assests Turnover Ration (TATO) an average firm in the industry has = 2.5

    Assests intended to be achieved by Rangoon Corps = Rangoon Corp's sales/ TATO of ...

    Solution Summary

    The solution determines how much Rangoon Corp's assets much be reduced to bring the TATO into the industry average.