(a) Calculate Kingbird\'s (1) asset turnover ratio, and (2) return on assets rat

Question

(a)

Calculate Kingbird's (1) asset turnover ratio, and (2) return on assets ratio for each year. (Round answers to 2 decimal places, e.g. 52.75.)

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Kingbird Inc., a fertilizer company based in Calgary, had the following information on its financial statements for the fiscal years ending December 31. All figures are in millions of US dollars.
2014 2013 2012 2011 Net sales $16,030 $15,725 $16,860 $15,270 Net earnings $700 $1,060 $1,428 $1,275 Total assets $17,100 $15,940 $14,363 $13,040

Explanation / Answer

Average Total assets = ( Total asset current year + Total asset previous year) / 2

For 2014 = ($17,100 + $15,940 ) / 2 = $16,520

For 2013 = ($15,940 + $14,363) / 2 = $15,151.50

For 2012 = ($14,363 + $13,040) / 2 = $13,701.50

(1) Asset turnover ratio = Net sales / Average Total assets .

For 2014 = $16,030 / $16,520 = 0.97 times

For 2013 = $15,725 / $15,151.50 = 1.04 times

For 2014 = $700 / $16,520 = 4.24 %

For 2013 = $1,060 / $15,151.50 = 7%

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