Question

Coronado Company reported net sales of $555000, net income of $71900, beginning total assets of $239000,...

Coronado Company reported net sales of $555000, net income of $71900, beginning total assets of $239000, and ending total assets of $261000. What was the company's asset turnover?

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Answer #1

• ASSETS TURNOVER :- Asset turnover ratio measures the value of a company’s sales or revenues generated relative to the value of its assets. The Asset Turnover ratio can often be used as an indicator of the efficiency with which a company is deploying its assets in generating revenue.

Asset Turnover = Sales / Average Total Assets

SALES = $ 5,55,000

AVG. TOTAL ASSETS = $2,39,000 + $ 2,61,000 / 2

= $ 2,50,000

Assets turnover ratio = $ 5,55,000 / $ 2,50,000

= 2.22

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