Huntswell Corporation has two major divisionsAgricultural Products and Industrial Products. Data for the year just finished is as follows: For the Industrial Division, how much is the asset turnover?

Question

Huntswell Corporation has two major divisionsAgricultural Products and Industrial Products. Data for the year just finished is as follows:  For the Industrial Division, how much is the asset turnover?

Quizplus · Accepted Answer

The asset turnover ratio is calculated by dividing net sales by average total assets. 
For the Industrial Division:
Net sales = $2,000,000 
Average total assets = ($2,500,000 + $2,000,000) / 2 = $2,250,000 
Asset Turnover Ratio = $2,000,000 / $2,250,000 = 0.8889 or 88.89% 
Therefore, the answer is C) 18.8%.

Huntswell Corporation Has Two Major DivisionsAgricultural Products and Industrial Products