객관식
XYZ Company had net sales of \$500,000 and COGS of \$320,000. If the beginning balance of Total Assets was \$300,000 and the ending balance in Total Assets was \$400,000, what is the Total Asset Turnover ratio?
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14. Financial Statement Analysis
Ratios: Total Asset Turnover
객관식
The total asset turnover ratio is computed by taking net sales divided by which of the following?
A
Total liabilities
B
Average shareholders' equity
C
Average total assets
D
Net income
검증된 단계별 안내1
Understand the concept of the total asset turnover ratio: This ratio measures how efficiently a company uses its assets to generate sales. It is calculated by dividing net sales by average total assets.
Identify the numerator in the formula: The numerator is 'net sales,' which represents the revenue generated from selling goods or services during a specific period.
Determine the denominator in the formula: The denominator is 'average total assets,' which is calculated by averaging the total assets at the beginning and end of the period. This provides a more accurate representation of the assets used during the period.
Write the formula for total asset turnover ratio: \( \text{Total Asset Turnover Ratio} = \frac{\text{Net Sales}}{\text{Average Total Assets}} \).
Clarify why other options are incorrect: Total liabilities, average shareholders' equity, and net income are not used in this formula because they do not directly measure the efficiency of asset utilization in generating sales.
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