Net Income $50,000 Net Sales $30,000 Current Assets $150,000 Current

The asset turnover ratio is a measure of a company's efficiency in generating revenue from its owned resources. It is calculated by dividing net sales by average total assets. This ratio can be used to determine whether a company is able to justify holding a large number of assets on its balance sheet. A high asset turnover ratio indicates that the company is effectively utilizing its assets to generate sales, while a lower ratio may suggest inefficiency. The formula for calculating the ratio is: Asset Turnover ratio = Total Revenue / Average Assets.

Using the information provided, the asset turnover ratio can be calculated as follows:

Asset Turnover Ratio = Net Sales / Total Assets = $30,000 / $350,000 ≈ 0.086

Therefore, the asset turnover ratio is approximately 0.09.

Work fast from anywhere

Stay up to date and move work forward with BrutusAI on macOS/iOS/web & android. Download the app today.