Asset turnover ratio is used to determine the efficiency of the company towards use of asset towards generation of sales. The formula to calculate asset turnover is given below: Asset turnover = Net revenue Average total assets The asset turnover for Company K.

Question

Want to see the full answer?

Answer 1

Question

Chapter 6, Problem 6.31EX

a.

To determine

Asset turnover ratio is used to determine the efficiency of the company towards use of asset towards generation of sales. The formula to calculate asset turnover is given below:

Asset turnover = Net revenueAverage total assets

The asset turnover for Company K.

b.

To determine

To Comment: Why Company T’s asset turnover is lower than Company K.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Kroger Co., a national supermarket chain, reported the following data (in millions) in its financial statements for a recent year: Total revenue $108,465 Total assets at end of year 30,556 Total assets at beginning of year 29,281 a. Compute the asset turnover. Round to two decimal places. b. Tiffany & Co. is a large North American retailer of jewelry with an asset turnover of 0.86. Why would Tiffany's asset turnover be lower than that of Kroger?

Selected financial data of Target Corporation and Wal-Mart Stores, Inc. for a recent year are presented here (in millions). Target Corporation Wal-Mart Stores, Inc. Income Statement Data for Year Net sales $61,471 $374,526 Cost of goods sold 41,895 286,515 Selling and administrative expenses 16,200 70,847 Interest expense 647 1,798 Other income (expense) 1,896 4,273 Income tax expense 1,776 6,908 Net income $2,849 $12,731 Balance Sheet Data (End of Year) Current assets $18,906 $47,585 Noncurrent assets 25,654 115,929 Total assets $44,560 $163,514 Current liabilities $11,782 $58,454 Long-term debt 17,471 40,452 Total stockholders' equity 15,307 64,608 Total liabilities and stockholders' equity $44,560 $163,514 Target Corporation Wal-Mart Stores, Inc. Beginning-of-Year Balances Total assets $37,349 $151,587 Total stockholders' equity 15,633 61,573 Current liabilities 11,117 52,148 Total liabilities 21,716 90,014 Other Data Average net accounts receivable $7,124 $3,247 Average inventory…

Nordstrom, Inc. operates department stores in numerous states. Suppose selected financial statement data (in millions of dollars) for a recent year follow. End of Year Beginning of Year Cash and cash equivalents $ 72 $ 358 Receivables (net) 1,942 1,788 Merchandise inventory 900 956 Other current assets 303 259 Total current assets $3,217 $3,361 Total current liabilities $1,601 $1,635 Compute working capital and the current ratio at the beginning of the year and at the end of the year. (Round current ratio to 2 decimal places, e.g. 15.25.) Beginning of Year End of Year Working capital $ enter a dollar amount $ enter a dollar amount Current ratio enter current ratio rounded to 2 decimal places :1 enter current ratio rounded to 2 decimal places :1