During 2017, Ronald Corporation reported net sales of $2,000,000, net income of $900,000, and depreciation expense of $100,000. Ronald also reported beginning total assets of $1,000,000, ending total assets of $1,500,000, plant assets of $800,000, and accumulated depreciation of $500,000. Ronald's asset turnover is
A)2.0 times.
B)1.6 times.
C)1.33 times.
D)0.72 times.

Question

Quizplus · Accepted Answer

Asset turnover is calculated by dividing net sales by average total assets.

Average total assets = (beginning total assets + ending total assets) / 2
Average total assets = ($1,000,000 + $1,500,000) / 2 = $1,250,000

Asset turnover = Net sales / Average total assets
Asset turnover = $2,000,000 / $1,250,000
Asset turnover = 1.6 times

Therefore, the correct answer is B.

During 2017, Ronald Corporation Reported Net Sales of $2,000,000, Net