value 1000 points E317 Computing and Explaining the Total As

value 10.00 points E3-17 Computing and Explaining the Total Asset Turnover Ratio LO3-6 The following data are from annual reports of Justin\'s Jewellery Company: 2017 2016 2015 Total assets Total liabilities Total shareholders\' equity Sales Net earnings $ 68,000 $ 58,000 48,000 39,000 29,000 14,000 44,000 140,000 130,000 116,000 4,000 9,000 16,000 52,000 5,800 Compute Justin\'s total asset tunover ratio and its return on assets for 2016 and 2017. (Enter your answers in numbers and not in percentages. Round \"Asset turnover\" to 1 decimal place and \"Return on assets\" to 3 decimal places.) 2017 2016 Asset turnover Return on assets References eBook &Resources;

Solution

Assets Turnover Ratio and Return on Assets for the Year 2016

Computation of Average Assets

Total Assets -2015

48000

Total Assets -2016

58000

Average Assets (48000+58000)/2

53000

Assets Turnover Ratio = Sales/Average Assets

Assets Turnover Ratio = 130000/53000

Assets Turnover Ratio = 2.5

Return on Assets = Net Earnings/Average assets

Return on Assets = 4000/53000

Return on Assets = 0.075

Assets Turnover Ratio and Return on Assets for the Year 2017

Computation of Average Assets

Total Assets -2017

68000

Total Assets -2016

58000

Average Assets (68000+58000)/2

63000

Assets Turnover Ratio = Sales/Average Assets

Assets Turnover Ratio = 140000/63000

Assets Turnover Ratio = 2.2

Return on Assets = Net Earnings/Average assets

Return on Assets = 5800/63000

Return on Assets = 0.092

Assets Turnover Ratio and Return on Assets for the Year 2016
Computation of Average Assets
Total Assets -2015	48000
Total Assets -2016	58000
Average Assets (48000+58000)/2	53000
Assets Turnover Ratio = Sales/Average Assets
Assets Turnover Ratio = 130000/53000
Assets Turnover Ratio = 2.5
Return on Assets = Net Earnings/Average assets
Return on Assets = 4000/53000
Return on Assets = 0.075