Need help figuring out these blanks, please. Thank you. LOGIC COMPANY Comparativ

Question

Need help figuring out these blanks, please. Thank you.

LOGIC COMPANY Comparative Income Statement For Years Ended December 31, 2016 and 2017 2017 2016 Gross sales Sales returns and allowances Net sales Cost of merchandise (goods) sold Gross profit Operating expenses $19,200 $15,150 100 $18,300 $15,050 8,950 $ 6,350 6,100 900 11,950 $720 610 2,100 510 310 $ 4,020 3,530 $ 2,330 $ 2,570 510 $ 1,750 2,060 824 $ 1,050 1,236 Depreciation 2,350 570 380 Selling and administrative Research Miscellaneous Total operating expenses Income before interest and taxes Interest expense Income before taxes Provision for taxes Net income 580 700

Explanation / Answer

Asset turnover ratio tells the efficieny of a company's ability to generate sales from its total assets.

Asset Turnover ratio = Net Sales / Total Assets

Generally we take average assets in denominator. Average Assets = (Beginning Assets + Year end Assets)/2

Beginning Assets would the Year end assets of last year

In this case we do not have year ending assets of 2015 so we can not calculate average assets of 2016 therefore we will use only Year ending assets for both year

Net Sales of 2017 = $18,300

Total Assets of 2017 = $89,600

So Asset turnover ratio of 2017 = Net Sales of 2017 / Total Assets of 2017 = 18300/89600 = 0.20

Net Sales of 2016 = $15,050

Total Assets of 2016 = $66,100

So Asset turnover ratio of 2016 = Net Sales of 2016 / Total Assets of 2016 = 15050/66100 = 0.23

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