During 2018, Rathke Corporation reported net sales of $3,000,000, net income of $1,200,000, and depreciation expense of $100,000. Rathke also reported beginning total assets of $1,000,000, ending total assets of $1,500,000, plant assets of $800,000, and accumulated depreciation of $500,000. Rathke's asset turnover is
A) 3 times.
B) 2.4 times.
C) 2.0 times.
D) .96 times.

Question

Quizplus · Accepted Answer

Asset turnover is calculated by dividing net sales by average total assets.

Average total assets = (beginning total assets + ending total assets) / 2
= (1,000,000 + 1,500,000) / 2
= 1,250,000

Asset turnover = net sales / average total assets
= 3,000,000 / 1,250,000
= 2.4 times.

Therefore, the correct answer is B.

During 2018, Rathke Corporation Reported Net Sales of $3,000,000, Net