Multiple Choice
Which of the following is classified as an asset utilization ratio?
14. Financial Statement Analysis
Ratios: Total Asset Turnover
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XYZ Company had net sales of $500,000 and COGS of $320,000. If the beginning balance of Total Assets was $300,000 and the ending balance in Total Assets was $400,000, what is the Total Asset Turnover ratio?
A
0.51
B
1.25
C
1.43
D
1.67
Verified step by step guidance1
Understand the Total Asset Turnover ratio formula: Total Asset Turnover = Net Sales / Average Total Assets.
Calculate the Average Total Assets: (Beginning Total Assets + Ending Total Assets) / 2.
Substitute the given values into the Average Total Assets formula: (300,000 + 400,000) / 2.
Calculate the Average Total Assets using the values from the previous step.
Substitute the Net Sales and the calculated Average Total Assets into the Total Asset Turnover formula to find the ratio.
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