Deflorio Corporation's inventory at the end of Year 2 was $180,000 and its inventory at the end of Year 1 was $169,000. The company's total assets at the end of Year 2 were $1,551,000 and its total assets at the end of Year 1 were $1,454,000. Sales amounted to $1,580,000 in Year 2.The company's total asset turnover for Year 2 is closest to:
A) 1.05
B) 0.95
C) 8.61
D) 9.05

Question

Quizplus · Accepted Answer

Total asset turnover is calculated as Sales divided by Average Total Assets. For Year 2, Sales = $1,580,000. Average Total Assets = (Total Assets at the end of Year 2 + Total Assets at the end of Year 1) / 2 = ($1,551,000 + $1,454,000) / 2 = $1,502,500. Thus, Total Asset Turnover = $1,580,000 / $1,502,500 ≈ 1.05.

Deflorio Corporation's Inventory at the End of Year 2 Was