Concept #1: Ratios: Total Asset Turnover

Practice: 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?

Practice: ABC Company had $200,000 in Net Sales and Gross Profit of $80,000. If Total Assets equaled $400,000, what is the Total Asset Turnover ratio?

Consider the following financial data for Aldo’s Music Stores:
Calculate Aldo’s total asset turnover.
a. 17.56
b. 0.73
c. 3.26
d. 3.94
e. 2.12

Current year sales revenues total $1,250,000. The total assets at the end of the previous year totaled $900,000. Total assets at the end of the current year totaled $980,000. What is the asset turnover ratio?
A) 1.330
B) 1.389
C) 1.276
D) 1.156

Owl buttons had gross sales of $500,000, net sales of $400,000 and average total assets of $100,000. What was its total asset turnover ratio?
a. 1/5
b. 1/4
c. 4.0
d. 5.0

An increase in average total assets, with all else remaining unchanged, will
A) decrease financial leverage.
B) increase asset turnover.
C) decrease net profit margin.
D) increase financial leverage

The net sales for the year total $4,000,000 and the December 31 cash balance is $50,000. Assets totaled $600,000 at the beginning of the year and $1,000,000 at the end of the year. What is the total asset turnover?
A.4.00
B.4.40
C.5.00
D.6.51
E.None of the above

Consider the following financial data for Mary’s Home Accessories:
Calculate Mary’s total asset turnover.
a. 2.80
b. 1.43
c. 9.00
d. 0.72
e. 2.33

Over the past year, Roberts & Co. has realized an increase in its current ratio and a drop in its total asset turnover ratio. However, the company’s sales, quick ratio, and fixed asset turnover ratio have remained constant. What explains these changes?
a. Net income has risen.
b. Current liabilities have risen.
c. The company is holding excessive levels of cash.
d. Inventory levels have increased.
e. Fixed assets have increased.

If a company has sales of $500,000, cost of goods sold of $100,000, operating expenses of $100,000, average inventory of $8,000, average accounts receivable of $10,000, and average total assets of $35,000, what is its total asset turnover:
a. 50
b. 20
c. 14.29
d. 8.57
e. None of the above