Chapter 24, Problem 12CP

To determine

ASSET TURNOVER RATIO: The asset turnover ratio measures the efficiency with which the firm uses its total assets. In other words this ratio shows how efficiently can a company use its assets to generate sales.

$\text{ASSET TURNOVER RATIO = }\frac{\text{NET SALES}}{\text{AVERAGE TOTAL ASSETS}}\times 100$

AVERAGE TOTAL ASSETS: The average total assets is the average of the aggregate assets during a two year period.

$\text{AVERAGE TOTAL ASSETS}=\frac{\text{TOTAL ASSETS(CURRENT YEAR)+TOTAL ASSETS(PREVIOUS YEAR}}{2}$

To determine:

The Asset turnover ratio and interpret the result.