During 2014, Ronald Corporation reported net sales of $1,500,000, 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 ratio is
A) 1.5 times.
B) 1.2 times.
C) 0.98 times.
D) 0.72 times.

Question

Quizplus · Accepted Answer

The asset turnover ratio is calculated as net sales divided by average total assets. Average total assets = ($1,000,000 + $1,500,000) / 2 = $1,250,000. Asset turnover ratio = $1,500,000 / $1,250,000 = 1.2 times.

During 2014, Ronald Corporation Reported Net Sales of $1,500,000, Net