**Financial Data Analysis**The table presents key financial figures for a company's performance over a specific period:- **Total Assets on January 1:** $125,000- **Total Assets on December 31:** $75,000- **Net Sales:** $850,000- **Gross Margin:** $300,000- **Net Income:** $400,000**Question:**Calculate the company's total asset turnover.**Options:**- 0.12- 4.00- 3.00- 8.50**Explanation:**Total asset turnover is a measure of how efficiently a company uses its assets to generate sales. It is calculated using the formula:\[\text{Total Asset Turnover} = \frac{\text{Net Sales}}{\text{Average Total Assets}}\]Where:- **Net Sales** is $850,000- **Average Total Assets** is calculated as:\[\text{Average Total Assets} = \frac{\text{Total Assets on January 1} + \text{Total Assets on December 31}}{2}\]Substitute the values:\[\text{Average Total Assets} = \frac{125,000 + 75,000}{2} = 100,000\]Then, calculate the turnover:\[\text{Total Asset Turnover} = \frac{850,000}{100,000} = 8.50\]Thus, the correct option is **8.50**.

Assets turnover ratio: Assets turnover ratio measures the efficiency of a company's assets to…

Total assets, January 1 Total assets, December 31 Net sales Gross margin Net income $ 125,000 75,000 O 0.12 O 4.00 O 3.00 O 8.50 850,000 300,000 400,000 The company's total asset turnover is closest to:

Total assets, January 1 Total assets, December 31 Net sales Gross margin Net income $ 125,000 75,000 O 0.12 O 4.00 O 3.00 O 8.50 850,000 300,000 400,000 The company's total asset turnover is closest to:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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