Rent-a-Centre
Selected data from the financial statements are provided in the following table:
$\begin{array}{lrr}&\text { Year } 2&\text { Year } 1\
\text { Current assets } & \$ 12,000 & \$ 6,000 \
\text { Long-term assets } & 14,000 & 8,000 \
\text { Current liabilities } & 4,000 & 6,000 \
\text { Long-term liabilities } & 14,000 & 0 \
\text { Shareholders' equity } & 8,000 & 8,000 \
\text { Net sales } & 19,000 & 18,200 \
\text { Net income } & 2,000 & 1,000
\end{array}$
-Refer to the figure Rent-a-Centre.What is the company's asset turnover ratio for Year 2?

Question

Rent-a-Centre
Selected data from the financial statements are provided in the following table:
 $\begin{array}{lrr}&\text { Year } 2&\text { Year } 1\
\text { Current assets } & \$ 12,000 & \$ 6,000 \
\text { Long-term assets } & 14,000 & 8,000 \
\text { Current liabilities } & 4,000 & 6,000 \
\text { Long-term liabilities } & 14,000 & 0 \
\text { Shareholders' equity } & 8,000 & 8,000 \
\text { Net sales } & 19,000 & 18,200 \
\text { Net income } & 2,000 & 1,000
\end{array}$
-Refer to the figure Rent-a-Centre.What is the company's asset turnover ratio for Year 2?

Quizplus · Accepted Answer

The asset turnover ratio is calculated by dividing net sales by average total assets. Average total assets are calculated by adding the beginning and ending total assets and dividing by 2. In this case, the beginning total assets are $14,000 and the ending total assets are $26,000, so the average total assets are $20,000. The net sales are $19,000, so the asset turnover ratio is $19,000 / $20,000 = 0.95.

Rent-A-Centre Selected Data from the Financial Statements Are Provided in the Following

Rent-A-Centre
Selected Data from the Financial Statements Are Provided in the Following