Question

Pizza, Inc. provides the following data:

​ 2019 2018
Assets ​ ​
Current Assets: ​ ​
Cash and Cash Equivalents $30,000 $25,000
Accounts Receivable, Net 37,000 62,000
Merchandise Inventory 59,000 50,000
Total Current Assets $126,000 137,000
Property, Plant, and Equipment, Net $124,000 120,000
Total Assets $250,000 $257,000

For the year ending December 31, 2019:

Net Credit Sales $510,000
Cost of Goods Sold (160,000)
Gross Profit $350,000

Calculate the asset turnover ratio for 2019. There are no cash sales. (Round your answer to two decimal places.)

a. 2.01 times

b.4.05 times

c.1.01 times

d. 0.64 times

Answer 1

a. 2.01 times

Step-by-step explanation:

Asset Turnover Ratio = Net Sales / Average Total Assets

Asset Turnover Ratio = $510,000 / $253,500

Asset Turnover Ratio = 2.01 times

Asset Turnover Ratio > 1

Net Sales > Average Assets