LOGIC COMPANY Comparative Balance Sheet December 31, 2014 and 2015 2015 2014 Ass

Question

LOGIC COMPANY
Comparative Balance Sheet
December 31, 2014 and 2015 2015 2014 Assets   Current assets:      Cash $ 12,000     $ 9,000      Accounts receivable 16,500     12,500      Merchandise inventory 8,500     14,000      Prepaid expenses 24,000     10,000        Total current assets $ 61,000     $ 45,500   Plant and equipment:      Building (net) $ 14,500     $ 11,000      Land 13,500     9,000           Total plant and equipment $ 28,000     $ 20,000   Total assets $ 89,000     $ 65,500 Liabilities   Current liabilities:      Accounts payable $ 13,000     $ 7,000      Salaries payable 7,000     5,000           Total current liabilities $ 20,000     $ 12,000   Long-term liabilities:      Mortgage note payable 22,000     20,500        Total liabilities $ 42,000     $ 32,500   Stockholders’ Equity   Common stock $ 21,000     $ 21,000   Retained earnings 26,000     12,000            Total stockholders’ equity      $ 47,000     $ 33,000   Total liabilities and stockholders’ equity $ 89,000     $ 65,500 Calculate the asset turnover ratio. (Enter your response as a decimal rounded to two places.)     2015     2014   Asset turnover ratio LOGIC COMPANY
Comparative Balance Sheet
December 31, 2014 and 2015 2015 2014 Assets   Current assets:      Cash $ 12,000     $ 9,000      Accounts receivable 16,500     12,500      Merchandise inventory 8,500     14,000      Prepaid expenses 24,000     10,000        Total current assets $ 61,000     $ 45,500   Plant and equipment:      Building (net) $ 14,500     $ 11,000      Land 13,500     9,000           Total plant and equipment $ 28,000     $ 20,000   Total assets $ 89,000     $ 65,500 Liabilities   Current liabilities:      Accounts payable $ 13,000     $ 7,000      Salaries payable 7,000     5,000           Total current liabilities $ 20,000     $ 12,000   Long-term liabilities:      Mortgage note payable 22,000     20,500        Total liabilities $ 42,000     $ 32,500   Stockholders’ Equity   Common stock $ 21,000     $ 21,000   Retained earnings 26,000     12,000            Total stockholders’ equity      $ 47,000     $ 33,000   Total liabilities and stockholders’ equity $ 89,000     $ 65,500

Explanation / Answer

Asset Turnover ratio = Turnover /Total Assets

2015= 18000/89000 =0.20

2014= 14900/65000 = 0.23

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