Question

During 2013, Stein Corporation reported net sales of $3,500,000 and net income of$2,100,000. Stein also reported beginning total assets of $1,000,000 and ending totalassets of $1,500,000. Stein’s asset turnover ratio is______.

a.3.5 times.
b.2.8 times.
c.2.3 times.
d.1.7 times

Answer 1

b.2.8 times.

Step-by-step explanation:

Asset turnover = net sales/average total assets

From Stein Corporation report,

Net sales = $3,500,000

Beginning total assets = $1,000,000

Ending total assets = $1,500,000

Average total asset = ($1,000,000 + $1,500,000)/2

= $1,250,000

Asset turnover = $3,500,000/$1,250,000

= 2.8 times

Option b is right.