Fireworks City Information for 2012 and 2011 is presented below for this company which uses the straight-line depreciation method.
$\begin{array}{l}
\begin{array}{lll}
\
\text { Property, plant and equipment }\
\text { Accumulated depreciation }\
\text {Depreciation expense }\
\text {Net sales }\
\text { Total assets }\
\end{array}
\begin{array}{lll}
\underline{ 2012 }& \underline{ 2011 } \
{ \$750,000 } & { \$ 190,000 } \
100,000 & 85,000 \
62,500 & 47,500 \
1,000,000 & 900,000 \
625,000 & 475,000
\end{array}
\end{array}$
-Refer to Fireworks City.Determine the asset turnover ratio for 2012.
A)7.84 times
B)1.60 times
C)4.00 times
D)4.55 times

Question

Fireworks City Information for 2012 and 2011 is presented below for this company which uses the straight-line depreciation method.
$\begin{array}{l}
\begin{array}{lll}
\
\text { Property, plant and equipment  }\
\text { Accumulated depreciation   }\
\text {Depreciation expense }\
\text {Net sales }\
\text { Total assets }\
\end{array}
\begin{array}{lll}
 \underline{ 2012 }&  \underline{ 2011 } \ 
 { \$750,000 } & { \$ 190,000 } \
100,000 & 85,000 \ 
62,500 & 47,500 \ 
1,000,000 & 900,000 \ 
625,000 & 475,000
\end{array}
\end{array}$ 
-Refer to Fireworks City.Determine the asset turnover ratio for 2012.
A)7.84 times
B)1.60 times
C)4.00 times
D)4.55 times

Quizplus · Accepted Answer

The asset turnover ratio is calculated by dividing net sales by total assets. For 2012, the asset turnover ratio is 1,000,000 / 625,000 = 7.84 times.

Fireworks City Information for 2012 and 2011 Is Presented Below