Answer:
Asset Turnover ratio = 0.2
Explanation:
Asset Turnover ratio is basically the ability of the company to generate sales from the use of its assets.
The formula for the above is:
= [tex]\frac{Net\ Sales}{Average\ Assets}[/tex]
Net sales for the period = $4,000,000
Average assets = [tex]\frac{Beginning\ Assets\ +\ Closing\ Assets}{2}[/tex]
Beginning Assets = $16,000,000
Closing value of assets = $24,000,000
Average = $20,000,000
Therefore, asset turnover ratio = [tex]\frac{4,000,000}{20,000,000} = 0.2[/tex]
Or in percentage terms = 20%
