Asked by Christian Broussard on Jun 23, 2024
Verified
Deflorio Corporation's inventory at the end of Year 2 was $156,000 and its inventory at the end of Year 1 was $140,000.The company's total assets at the end of Year 2 were $1,416,000 and its total assets at the end of Year 1 were $1,390,000.Sales amounted to $1,320,000 in Year 2.The company's total asset turnover for Year 2 is closest to:
A) 0.94
B) 1.06
C) 5.38
D) 0.19
Total Asset Turnover
Total Asset Turnover is a financial ratio that measures a company's efficiency in using its assets to generate sales revenue.
Total Assets
The sum of all assets owned by a company, listed on the balance sheet, representing the resources it has available to generate future profits.
- Analyze total asset turnover and its impact on company performance.
Verified Answer
HS
Harpreet SandhuJun 29, 2024
Final Answer :
A
Explanation :
Total asset turnover = Sales ÷ Average total assets*
= $1,320,000 ÷ $1,403,000 = 0.94 (rounded)
*Average total assets = ($1,416,000 + $1,390,000)÷ 2 = $1,403,000
= $1,320,000 ÷ $1,403,000 = 0.94 (rounded)
*Average total assets = ($1,416,000 + $1,390,000)÷ 2 = $1,403,000
Learning Objectives
- Analyze total asset turnover and its impact on company performance.