Acme Company has a total asset turnover of 1.25 for the current period.What are net sales given that average total assets are $40,000?
A)Net sales cannot be computed from the given information
B)$50,000
C)$32,000
D)$1.25 million
E)$90,000

Question

Quizplus · Accepted Answer

The formula for total asset turnover is net sales divided by average total assets. Rearranging the formula, we get net sales equals total asset turnover multiplied by average total assets. Therefore, net sales equals 1.25 multiplied by $40,000, which results in $50,000. Option B is the correct answer.

Acme Company Has a Total Asset Turnover of 1