ABC Depot: Asset turnover ratio

The ABC Depot reported the following data (in millions) in its recent financial statements:

	Year 2		Year 1
Total sales	$97,200		$100,520
Total assets:
Beginning of year	62,400		67,200
End of year	67,200		76,400

a. Determine the asset turnover ratio for ABC Depot for Year 2 and Year 1. Round to one decimal place.

		Year 2		Year 1
Asset turnover ratio

b. What does an asset turnover ratio indicate?

Effectiveness in the use of assets to generate revenue.

Effective use of revenue to create assets.

Effective use of assets to reduce cost.

Effective use of assets to increase assets.