Question

Deflorio Corporation’s inventory at the end of Year 2 was $182,000 and its inventory at the end of Year 1 was $171,000. The company’s total assets at the end of Year 2 were $1,556,000 and its total assets at the end of Year 1 were $1,458,000. Sales amounted to $1,600,000 in Year 2.The company’s total asset turnover for Year 2 is closest to:

Answer 1

sales turnover = 1.062

Step-by-step explanation:

`sales \: TO = (sales)/(average \: cost)`

where:

`avg \: assets = (beginning+ending) / 2`

1,458,000+1,556,000 = 1,507,000 average assets

1,600,000/1,507,000 = 1.061712011 = 1.062

The inventory is irrelevant for the calculation.