Question

A company reports the following:

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**.