A company has net income of $130,500.Its net sales were $1,740,000 and its average total assets were $2,750,000.Its total asset turnover is equal to 4.7%.

Question

Quizplus · Accepted Answer

The problem is incorrect. To calculate total asset turnover, you divide net sales by average total assets.

Total asset turnover = net sales / average total assets 
Total asset turnover = $1,740,000 / $2,750,000 
Total asset turnover = 0.633 or 63.3%

Therefore, the correct answer is B - this company's total asset turnover is 63.3%, not 4.7%.

A Company Has Net Income of $130,500