Question

The following information is provided for Sheridan Company and Grouper Corp.. Total assets 12/31/16 Sheridan Company 1200 Grouper Corp. 3140 Total assets 12/31/17 Sheridan Company 1175 Grouper Corp. 4080 What is Sheridan's asset turnover ratio (rounded) for 2017?

Answer 1

Sheridan's asset turnover ratio for 2017 cannot be calculated without the net sales figure. The average total assets for Sheridan can be computed, which is necessary to find the asset turnover ratio when net sales are known. The formula for asset turnover ratio is Net Sales divided by Average Total Assets.

Step-by-step explanation:

To calculate Sheridan's asset turnover ratio for 2017, we need to use the formula:

Asset Turnover Ratio = Net Sales / Average Total Assets

However, the net sales figure is not provided, so we cannot compute the exact asset turnover ratio. Typically, the net sales figure would be provided in the income statement. Once we have that, we would calculate the average total assets by adding the total assets at the beginning of the year (12/31/16) and the end of the year (12/31/17) and then dividing by two.

For Sheridan Company, the average total assets would be calculated as follows:

((1200 + 1175) / 2) = 1187.5

Then, the asset turnover ratio would be calculated by dividing net sales by the average total assets. Without the net sales, we can only provide the formula and the calculation of average assets, not the final asset turnover ratio.