The balance sheet of Paradise Pizza reports total assets of $1,500,000 and $1,700,000 at the beginning and end of the year,respectively.Net income and sales for the year are $240,000 and $2,000,000,respectively.What is Paradise Pizza's asset turnover?
A)1.25 times.
B)1.33 times.
C)8.33 times.

Question

Quizplus · Accepted Answer

Asset turnover is calculated as Sales divided by Average Total Assets. Average Total Assets = ($1,500,000 + $1,700,000) / 2 = $1,600,000. Asset Turnover = $2,000,000 / $1,600,000 = 1.25 times.

The Balance Sheet of Paradise Pizza Reports Total Assets of $1,500,000