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10 July, 13:08

Deflorio Corporation's inventory at the end of Year 2 was $167,000 and its inventory at the end of Year 1 was $152,000. The company's total assets at the end of Year 2 were $1,471,000 and its total assets at the end of Year 1 were $1,420,000. Sales amounted to $1,450,000 in Year 2. The company's total asset turnover for Year 2 is closest to:

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Answers (2)
  1. 10 July, 13:29
    0
    Options:

    0.98

    1.03

    9.28

    9.06

    Answer:

    Correct answer is A 0.98

    Explanation:

    Total asset turnover = Sales / Average total assets.

    Sales = $ 1390000 (Given in the question)

    Average total assets = (1446000 + 1404000) / 2

    = $ 1425000.

    Accordingly, Total asset turnover of company for the Year 2

    = 1390000 / 1425000

    = 0.98 (Option A)
  2. 10 July, 13:33
    0
    The assets turnover is closest to 1.003 times

    Explanation:

    The total assets turnover ratio is an important ratio to assess the efficiency of a firm's assets in generating revenue. The ratio calculated the $ value of revenue generated by each $1 of the asset.

    The formula for total assets turnover is:

    Total Assets turnover = net Sales / Average net total assets

    The average net total assets = (Opening value of assets + Closing value of assets) / 2

    Thus, the assets turnover is:

    Average net total assets = (1420000 + 1471000) / 2 = 1445500

    Assets turnover = 1450000 / 1445500 = 1.003 times
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