Last year's asset turnover ratio was 2.0.Sales have increased by 25% and average total assets have increased by 10% since that time.What is the current asset turnover ratio?

Question

Quizplus · Accepted Answer

To find the current asset turnover ratio, we need to divide the new sales by the new average total assets.

New Sales = 1.25 (last year's sales) = 2.5

New Average Total Assets = 1.10 (last year's average total assets)

Current Asset Turnover Ratio = New Sales / New Average Total Assets = 2.5 / 1.10 = 2.27

Therefore, the answer is A) 2.27.

Last Year's Asset Turnover Ratio Was 2