Question
Asked Jan 10, 2020
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Liberty Corporation reported beginning and ending total assets of $25,000 and $22,000, respectively. Its net sales for the year were $18,800. What was Liberty’s asset turnover ratio?

  • 0.75 
  • 0.85
  • 0.80
  • 1.25
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Expert Answer

Step 1

Asset turnover ratio:

 

Asset turnover ratio measures the productive capacity of the total assets to generate the sales revenue for the company. Thus, it shows the relationship between the net sales and the average total assets. Use the following formula to calculate the asset turnover ratio:

Accounting homework question answer, step 1, image 1
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Step 2

Calculate the asset turnover ratio of...

Accounting homework question answer, step 2, image 1
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