A company reports the following:

Question

Line Item Description Amount
Sales $1,725,150
Average total assets (excluding long-term investments) 821,500
Determine the asset turnover ratio. If required, round your answer to one decimal place.

Answer 1

The asset turnover ratio is calculated by dividing the sales by the average total assets. The formula is as follows:

\[ \text{Asset Turnover Ratio} = \frac{\text{Sales}}{\text{Average Total Assets}} \]

Given the values:

• Sales = $1,725,150
• Average Total Assets = $821,500

Now, plug the values into the formula:

\[ \text{Asset Turnover Ratio} = \frac{1,725,150}{821,500} \]

Calculating this:

\[ \text{Asset Turnover Ratio} \approx 2.096 \]

Rounding to one decimal place:

\[ \text{Asset Turnover Ratio} \approx 2.1 \]

Thus, the asset turnover ratio is 2.1.