Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 16

Williams Manufacturing uses scrap metal to produce various tools, such as drill bits, hammer heads, saw blades, and nails. The CEO has asked you to analyze the saw blades division to determine asset turnover for last quarter. You find that the saw blades division had an ROI of 20 percent, sales of $10 million, and operating profits of $1 million. What was the asset turnover rate for last quarter?

Step 1 of 2

Assets Turnover ratio:

Assets turnover ratio states that it calculates the amount of the organization income or with respect to the assets amount. It is also used in productivity from where an organization uses their assets so that they can create income.

To determine the assets turnover ratio the following formula can be used: