Mehring Company reported net sales of $540,000, net income of $72,000, beginning total assets of $240,000, and ending total assets of $360,000.What was the company's asset turnover?

Question

Quizplus · Accepted Answer

Asset turnover = net sales / average total assets
Average total assets = (beginning total assets + ending total assets) / 2
Average total assets = ($240,000 + $360,000) / 2 = $300,000

Asset turnover = $540,000 / $300,000 = 1.8 times

Mehring Company Reported Net Sales of $540,000, Net Income of $72,000