Selected current year company information follows: $$\begin{array} { | l | r | }
\hline \text { Net income } & \$ 15,953 \
\hline \text { Net sales } & 712,855 \
\hline \text { Total liabilities, beginning-year } & 83,932 \
\hline \text { Total liabilities, end-of-year } & 103,201 \
\hline \text { Total stockholders' equity, beginning-year } \ldots . . & 198,935 \
\hline \text { Total stockholders' equity, end-of-year } & 121,85 \
\hline
\end{array}$$ The total asset turnover is:
A) 2.24 times
B) 2.81 times
C) 3.64 times
D) 4.67 times
E) 6.28 times

Question

Selected current year company information follows: $$\begin{array} { | l | r | } 
\hline \text { Net income } & \$ 15,953 \
\hline \text { Net sales } & 712,855 \
\hline \text { Total liabilities, beginning-year } & 83,932 \
\hline \text { Total liabilities, end-of-year } & 103,201 \
\hline \text { Total stockholders' equity, beginning-year } \ldots . . & 198,935 \
\hline \text { Total stockholders' equity, end-of-year } & 121,85 \
\hline
\end{array}$$ The total asset turnover is:
A) 2.24 times
B) 2.81 times
C) 3.64 times
D) 4.67 times
E) 6.28 times

Quizplus · Accepted Answer

Total asset turnover = Net sales / Average total assets

We need to find the average total assets.

Beginning-year total assets = total liabilities + total stockholders' equity = 83,932 + 198,935 = 282,867
End-of-year total assets = total liabilities + total stockholders' equity = 103,201 + 121,850 = 225,051

Average total assets = (Beginning-year total assets + End-of-year total assets) / 2 
= (282,867 + 225,051) / 2 
= 253,959

Now, we can calculate the total asset turnover as:

Total asset turnover = Net sales / Average total assets 
= 712,855 / 253,959 
= 2.81 times

Therefore, the best choice is B) 2.81 times.

Selected Current Year Company Information Follows The Total Asset Turnover Is: A) 2

Selected Current Year Company Information Follows The Total Asset Turnover Is:
A) 2