BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Asset turnover

Financial statement data for years ending December 31, 2019 and 2018. for Edison Company follow:

  2019 2018
Sales $1,884,000 $1,562,000
Total assets:    
Beginning of year 770,000 650,000
End of year 800,000 770,000

a.    Determine the asset turnover for 2019 and 2018.

b.    Does the change in the asset turnover from 2018 to 2019 indicate a favorable or an unfavorable trend?

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:

Assetturnover=NetrevenueAverage total assets

To Determine: The asset turnover for 2019 and 2018 for Company E.

Explanation

Calculate the asset turnover for 2019.

Sales/ net revenue = $1,884,000

Average total assets = $785,000 (1)

Assetturnover=NetrevenueAverage total assets=$1,884,000$785,000=2.4

Working Notes:

Calculate the average total assets.

Beginning assets = $770,000

Ending assets = $800,000

Averagetotalassets=Beginningassets+Endingassets2=$770,000+$800,0002=$785,000 (1)

Calculate the asset turnover for 2018

b.

To determine

To Comment: Whether the change in the asset turnover from 2018 to 2019 indicate a favorable or an unfavorable trend.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

How are inflation and unemployment related in the short run?

Essentials of Economics (MindTap Course List)

Define manufacturing overhead.

Managerial Accounting: The Cornerstone of Business Decision-Making

STOCK SPLIT Gamma Medicals stock trades at 90 a share. The company is contemplating a 3-for-2 stock split. Assu...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)