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What is the asset turnover ratio for the division?

The following is selected data for the Consumer Products division of Arron Corporations for 200X:


Sales
$50,000,000
Average invested capital (assets)
20,000,000
Net income
2,000,000
Cost of capital
8%


What is the asset turnover ratio for the division


a)25

b)10

c)2.5

d)8


accounting   
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Answer #1

The liquidity ratio is a ratio that is used to assess an organization's liquidity. The current ratio and the quick ratio are the two ratios that are used to determine the organization's liquidity.


Calculation of Asset Turnover ratio


Asset Turnover ratio =  Net Sales / Average Total Assets

                                 =  $50,000,000 / $2,000,000

                                 =  2.5

  option c)2.5 is the correct option               


answered by: pr balajir rao
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