Last Year's Asset Turnover Ratio Was 2

question 39

Multiple Choice

Last year's asset turnover ratio was 2.0.Sales have increased by 25 percent and average total assets have increased by 10 percent since that time.What is the current asset turnover ratio?

• A)1.82
• B)2.05
• C)2.15
• D)2.27 sales/average total assets = 2.0

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Definitions:

Liabilities

Liabilities are financial obligations or debts owed by a business to others, which must be settled over time through the transfer of economic benefits including money, goods, or services.

Reversing Entry

An accounting entry that is made at the beginning of an accounting period to reverse or cancel out a previously made adjusting entry.

Salaries Expense

The total amount of salary payments owed to employees for work performed during a specific period.

Salaries Payable

An account that records amounts owed to employees for work performed but not yet paid, a liability on the balance sheet.