The ABC Depot reported the following data (in millions) in its recent financial statements: Year 1 Total sales Total assets: Year 2 Year 2 $102,880 Beginning of year 59,800 55,600 End of year 68,800 59,800 a. Determine the asset turnover ratio for ABC Depot for Year 2 and Year 1. Round to one decimal place. Year 1 $103,860 Asset turnover ratio b. What does an asset turnover ratio indicate? 1. Effectiveness in the use of assets to generate revenue. 2. Effective use of revenue to create assets. 3. Effective use of assets to reduce cost. 4. Effective use of assets to increase assets.
The ABC Depot reported the following data (in millions) in its recent financial statements: Year 1 Total sales Total assets: Year 2 Year 2 $102,880 Beginning of year 59,800 55,600 End of year 68,800 59,800 a. Determine the asset turnover ratio for ABC Depot for Year 2 and Year 1. Round to one decimal place. Year 1 $103,860 Asset turnover ratio b. What does an asset turnover ratio indicate? 1. Effectiveness in the use of assets to generate revenue. 2. Effective use of revenue to create assets. 3. Effective use of assets to reduce cost. 4. Effective use of assets to increase assets.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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