The Mount Vernon Company reported gross sales of $850,000, sales returns and allowances of $5,000 and sales discounts of $5,000. The company has total average assets of $500,000, of which $250,000 is property, plant, and equipment. What is the company's asset turnover ratio?
A)1.68 times
B)1.72 times
C)0.59 times
D)1.7 times

Question

Quizplus · Accepted Answer

The asset turnover ratio is: net sales/average assets. Net sales equals gross sales ($850,000) minus sales returns and allowances ($5,000); $845,000/$500,000 = 1.68 times.

The Mount Vernon Company Reported Gross Sales of $850,000, Sales