Question

​Seidner, Inc. provides the following​ data:2017 2016AssetsCurrent Assets:Cash and Cash Equivalents $40,000 $25,000Accounts Receivable, Net 37,000 62,000Merchandise Inventory 60,000 50,000Total Current Assets $137,000 137,000Property, Plant, and Equipment, Net $121,000 120,000Total Assets $258,000 $257,000Net Credit Sales $550,000Cost of Goods Sold (155,000 )Gross Profit $395,000Calculate the asset turnover ratio for 2017. (Round your answer to two decimal places.)

Answer 1

Answer: 2.14 times

Explanation: Asset turnover ratio refers to the financial ratio that is used by the analysts to evaluate whether the organisation is using their assets in an efficient manner for generating sales and revenue or not.

It could be computed using following formula :-

$asset\:turnover=\frac{net\:sales}{average\:assets}$

where,

$average\:assets=\frac{258,000+257000}{2}$

                                 = $257,500

putting the values into equation we get :-

$asset\:turnover=\frac{550000}{257500}$

                                  = 2.14 times