Snap Dragon Photo reported the following figures on its December 31, 2016, incom
ID: 2450149 • Letter: S
Question
Snap Dragon Photo reported the following figures on its December 31, 2016, income statement and balance sheet:
Net Sales
$440,000
Dec. 31, 2016
Dec. 31, 2015
Cash
$26,000
$28,000
Accounts Receivable
56,000
58,000
Merchandise Inventory
79,000
76,000
Prepaid Expenses
8,000
14,000
Property, plant and equipment, net
180,000
11,000
Compute the asset turnover ratio for 2016.
Net Sales
$440,000
Dec. 31, 2016
Dec. 31, 2015
Cash
$26,000
$28,000
Accounts Receivable
56,000
58,000
Merchandise Inventory
79,000
76,000
Prepaid Expenses
8,000
14,000
Property, plant and equipment, net
180,000
11,000
Explanation / Answer
2016
2015
Cash
26000
28000
Accounts Receivable
56000
58000
Merchandise Inventory
79000
76000
Prepaid Expenses
8000
14000
Property, plant and equipment, net
180000
11000
Total assets
349000
187000
Average assets = (349000+187000)/2
= 268000
Asset turnover = Sales/ average assets
=440,000/ 268000
= 1.642
2016
2015
Cash
26000
28000
Accounts Receivable
56000
58000
Merchandise Inventory
79000
76000
Prepaid Expenses
8000
14000
Property, plant and equipment, net
180000
11000
Total assets
349000
187000
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