On january 1, 2017 hillop, inc. had total assets of $370,000. during the year, the company purchased new machinery worth $88,000 and promised to pay the amount due after two years. throughout the year, it earned revenue of $60,000 every month. calculate the asset turnover ratio.

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Business

Karlie Lucas

31 October, 06:10

On january 1, 2017 hillop, inc. had total assets of $370,000. during the year, the company purchased new machinery worth $88,000 and promised to pay the amount due after two years. throughout the year, it earned revenue of $60,000 every month. calculate the asset turnover ratio.

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James Jackson · Answer 1

asset turnover ratio is the ratio of the value of a company's sales or revenues generated relative to the value of its assets. The Asset Turnover ratio can often be used as an indicator of the efficiency with which a company is deploying its assets in generating revenue. Given that the sales is 60k and the value of the asset is 370k, the ratio is simply the sales / value of assets which is 60 / (370-88).