Question

Huge Cart Inc. gives you the following information pertaining to the year 2017. Net sales $850,000 Cost of goods sold 500,000 Current assets 500,000 Current liabilities 250,000 Average total assets 1,000,000 Total liabilities 550,000 Net income 150,000 The asset turnover ratio of Huge Cart Inc. is

A. 0.15
B. 0.50
C. 1.18
D. 0.85

Answer 1

D. 0.85

Step-by-step explanation:

This can be calculated as follows:

Asset turnover ratio = Net sales ÷ Average total assets = $850,000 ÷ 1,000,000 = 0.85

This implies that Huge Cart Inc. has been using its assets to generate revenue 0.85 times.