A company had average total assets of $906,000. Its gross sales were $1,153,000 and its net sales were $946,000. The company's total asset turnover is?
The total asset turnover is the ratio of the net sales relative to the average total assets of the company. The total assets consist of fixed assets and current assets and a higher turnover ratio indicates that the company is using its assets in a very efficient manner to generate sales and contribute profits.
Answer and Explanation:
The total asset turnover of the company is 1.044 times.
As per the data:
- Average total assets = $906,000
- Net sales = $946,000
- Total asset turnover = Net sales / Average total assets
- Total asset turnover = $946,000 / $906,000
- Total asset turnover =1.044 times
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from Financial Accounting: Help and ReviewChapter 5 / Lesson 12