Question

For 2017, Lassiter Company reports beginning of the year total assets of $900,000, end of the year total assets of $1,100,000, net sales of $1,250,000, and net income of $250,000. Lassiter's 2017 asset turnover ratio is...(a)0.23 times.(b)0.25 times.(c)1.14 times.(d)1.25 times.

Answer 1

Answer: 0.25 times

Explanation: Asset turnover ratio is the profitability ratio that evaluates the ability of a company to generate revenue from the level of assets it have.

It is computed as follows :-

`=\:(Net\:income)/(Average\:total\:assets)`

where,

`average\:assets\:=(900,000\:+\:1,100,000)/(2)`

= 1,000,000

now putting the values into equation we get :-

`=\:(250,000)/(1,000,000)`

= 2.5 times