Senior Company knows revenues have increased but wonders if they are keeping up with its growing investment

Question:

Senior Company knows revenues have increased but wonders if they are keeping up with its growing investment in assets. Calculate asset turnover for 2011 and 2012 using the following data (Note: Round to one decimal place.):

Revenues, 2011 ………………………… $ 80,000

Revenues, 2012 ………………………… 88,000

Total assets, 2010 ……………………… 72,000

Total assets, 2011 ……………………… 80,000

Total assets, 2012 ……………………… 102,000

By this measure has the company improved? Why is it important to use average total assets in the calculation?

Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.