Question

Flask company reports net sales of $1,350 million; cost of goods sold of $1,150 million; net income of $230 million; and average total assets of $960 million. compute its total asset turnover.

Answer 1

Flask company reports net sales of $1,350 million; cost of goods sold of $1,150 million; net income of $230 million; and average total assets of $960 million.  Its total asset turnover will be:-

Asset turnover is calculated by dividing net sales by average total assets.

Net sales - $1350 million

Average total assets - $960 million

Asset turnover - $1350 / $ 960 = $1.41

In this formula, average total assets includes current assets, long term assets and other assets. Net sales is revenue earned by company. Asset turnover is calculated to determine how much sales is earned by using the assets of the company.

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