Selected current year company information follows: Net income ..................
ID: 2458825 • Letter: S
Question
Selected current year company information follows:
Net income ..................................................
$ 15,953
Net sales.......................................................
712,855
Total liabilities, beginning-year.....................
83,932
Total liabilities, end-of-year..........................
103,201
Total stockholders' equity, beginning-year…..
198,935
Total stockholders' equity, end-of-year.........
121,851
The total asset turnover is:
A. 2.24 times
B. 2.81 times
C. 3.64 times
D. 4.67 times
E. 6.28 times
Net income ..................................................
$ 15,953
Net sales.......................................................
712,855
Total liabilities, beginning-year.....................
83,932
Total liabilities, end-of-year..........................
103,201
Total stockholders' equity, beginning-year…..
198,935
Total stockholders' equity, end-of-year.........
121,851
Explanation / Answer
Asset turnover ratio = Net Sales / Average Total Assets
Assets = Liabilities + Stockholder's equity
Average total assets = ((83932+103201) + (198935+121851))/2
= 253960
Assets turonver ratio = $ 712855 / 253960
= 2.81 times
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