On January 1, 2017 Hillop, Inc had total assets of $369,000 During the year, the company purchased new machinery worth $90,000 and promised to pay the amount due after two years. Throughout the year, it earned revenue of $59,000 every month. Calculate the asset turnover ratio.
A) 1.04 times
B) 1.80 times
C) 1.71 times
D) 1.54 times
C .Asset turnover ratio = Net sales / Average total assets
Net sales = $59,000 x 12 = $708,000
Average total assets = [$369,000 + ($369,000 + $90,000 )] / 2 = $414,000
Asset turnover ratio = 708,000 / 414,000 = 1.71 times
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