Question

A company had the same amount of assets at the end of 2011 and 2012, $300,000. In 2012, net income was $40,000 and sales revenue was $390,000. At the end of 2012, total liabilities are $120,000. What is the asset turnover for 2012?

A.1.30
B.7.50
C.2.60
D.9.75

Answer 1

The asset turnover for 2012 is calculated by dividing the sales revenue ($390,000) by the average total assets ($300,000), which comes to 1.30. This corresponds to option A.

Step-by-step explanation:

The asset turnover ratio is calculated by dividing sales revenue by average total assets. Given the information that the company had the same amount of assets at the end of 2011 and 2012 ($300,000), the average total assets for 2012 are also $300,000. The total sales revenue for 2012 is $390,000. So the asset turnover for 2012 is calculated as follows:

Asset Turnover = Sales Revenue / Average Total Assets

Asset Turnover = $390,000 / $300,000 = 1.30

Therefore, the asset turnover for 2012 is 1.30, which corresponds to option A.