Question

During 2020, Flint Corporation reported net sales of $5,490,000 and net income of $1,320,000. Its balance sheet reported average total assets of $1,500,000. Calculate the asset turnover.

Answer 1

The asset turnover is 3.66 times

Step-by-step explanation:

Asset Turnover is the efficiency rate of the assets of the business to generate revenue for the business. It shows how efficiently the assets of the business are used to generate revenue for the business.

Formula for Asset turnover is as follow

Asset Turnover = Net sales / Average total assets

Asset Turnover = $5,490,000 / $1,500,000

Asset Turnover = 3.66 times

It means that the sale for the period is generated to 3.66 times of average total asset of the business.