Westport Company reports the following in millions: net sales of $25,300 for Year 2 and $22,640 for Year 1; end-of-year total assets of $14,875 for Year 2 and $13,680 for Year 1. Compute its total asset turnover for Year 2 and assess its level if competitors average a total asset turnover of 2.0 times.
What will be an ideal response?
Average total assets = ($14,875 + $13,680)/2 = $14,277.50
Total asset turnover = $25,300/$14,277.50= 1.8 times
Westport is not doing as well as its competitors. The company needs to improve relative to its competitors on total asset turnover.
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