Flagship Logistics provides the following information: Operating income $ 1 comma 500 comma 000 Net sales $ 13 comma 000 comma 000 Average total assets $ 1 comma 850 comma 000 Management's target rate of return 20 % What is the company's asset turnover ratio? (Round your answer to two decimal places.)

Question

Dale Burns

Business

26 February, 16:43

Flagship Logistics provides the following information: Operating income $ 1 comma 500 comma 000 Net sales $ 13 comma 000 comma 000 Average total assets $ 1 comma 850 comma 000 Management's target rate of return 20 % What is the company's asset turnover ratio? (Round your answer to two decimal places.)

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Answers (1)

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Jaydin Prince · Answer 1

The assets turnover ratio is 7.03 times.

Explanation:

The assets turnover ratio tells the efficiency of a company in utilizing its assets to generate revenue. The assets turnover ratio can also be stated as the $ amount of sales generated by every $1 of the assets of the firm used.

Asset Turnover Ratio = Net Sales / Average Net Assets

Thus, for Flagship Logistics, the Assets turnover ratio is:

Assets turnover ratio = 13,000,000 / 1,850,000 = 7.027 rounded off to 7.03