Question

Bradford Company had sales of $700,000 for a year. The total assets at the beginning of the year were $240,000, and the total assets at the end of the year were $280,000.
The asset turnover ratio is (round answer to 2 decimal places):

a. 2.69

b. 0.40

c. 0.34

d. 2.92

Answer 1

Answer:

Option (a) is correct.

Explanation:

Given that,

Sales = $700,000

Beginning total assets = $240,000

Ending total assets = $280,000

The asset turnover ratio refers to the ratio of sales to the average total assets.

Average total assets:

= (Beginning total assets + Ending total assets) ÷ 2

= ($240,000 + $280,000) ÷ 2

= $260,000

Therefore, the asset turnover ratio is as follows:

= Sales ÷ Average total assets

= $700,000 ÷ $260,000

= 2.69