Calculate the asset turnover ratio. (Enter your response as a decimal rounded to

Question

Calculate the asset turnover ratio. (Enter your response as a decimal rounded to 2 places.)

LOGIC COMPANY
Comparative Income Statement
For Years Ended December 31, 2016 and 2017 2017 2016 Gross sales $ 19,400 $ 15,300 Sales returns and allowances 800 100 Net sales $ 18,600 $ 15,200 Cost of merchandise (goods) sold 11,900 8,900 Gross profit $ 6,700 $ 6,300 Operating expenses: Depreciation $ 740 $ 620 Selling and administrative 2,500 2,200 Research 590 520 Miscellaneous 400 320 Total operating expenses $ 4,230 $ 3,660 Income before interest and taxes $ 2,470 $ 2,640 Interest expense 600 520 Income before taxes $ 1,870 $ 2,120 Provision for taxes 748 848 Net income $ 1,122 $ 1,272

Explanation / Answer

Asset turnover = Sales / total Assets

Normally we consider average total assets, but here i am considering only that year assets as base

2017 Sales = 18600

2017 Total Assets = 90000

2017 Asset turnover ratio = 18600 / 90000 = 0.21

2016 Sales = 15200

2016 Total Assets = 66800

2016 Asset turnover ratio = 15200 / 66800 = 0.23

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