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The balance sheet of Purdy's BBQ reports total assets of $800,000 and $900,000 at the beginning and end of the year, respectively. Net income and sales for the year are $85,000 and $1,700,000, respectively. What is Purdy's asset turnover? 10.0 times. 2.0 times. 20.0 times. 0.5 times.

Respuesta :

Answer:

Option (B) is correct.

Explanation:

Given that,

Total assets (Beginning) = $800,000

Total assets (Ending) = $900,000

Net income = $85,000

Sales = $1,700,000

Average assets = [Total assets (Beginning) + Total assets (Ending)] ÷ 2

                          = [$800,000 + $900,000] ÷ 2

                          = 850,000

Purdy's asset turnover:

= Sales ÷ Average assets

= $1,700,000 ÷ 850,000

= 2

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