The following information is provided for Crane Company and Blue Spruce Corp.. (
ID: 2488547 • Letter: T
Question
The following information is provided for Crane Company and Blue Spruce Corp..
(in $ millions)
Crane Company
Blue Spruce Corp.
Net income 2017
$150
$370
Net sales 2017
1655
4740
Total assets 12/31/15
1005
2110
Total assets 12/31/16
1190
3180
Total assets 12/31/17
1150
4100
What is Crane's asset turnover ratio (rounded) for 2017?
0.72 times
4.00 times
0.22 times
1.41 times
(in $ millions)
Crane Company
Blue Spruce Corp.
Net income 2017
$150
$370
Net sales 2017
1655
4740
Total assets 12/31/15
1005
2110
Total assets 12/31/16
1190
3180
Total assets 12/31/17
1150
4100
Explanation / Answer
Asset turnover ratio = Net sales/Average total assets
Average total assets = (Beginning total assets + Ending total assets) / 2
Crane company’s Average total assets for 2017 = (Total assets 12/31/16 + Total assets 12/31/17)/2 = ($1,190 million + $1,150 million)/2 = $1,170 million
Crane company’s Net sales for 2017 = $1,655 million
Crane company’s asset turnover ratio for 2017 = $1,655 million/$1,170 million = 1.41 times
Hence, Answer is 1.41 times
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