Teridan Co. reports net sales of $4,796,000 for 2010 and $8,758,000 for 2011. End-of-year balances for total

Question:

Teridan Co. reports net sales of $4,796,000 for 2010 and $8,758,000 for 2011. End-of-year balances for total assets are: 2009, $1,578,000; 2010, $1,824,000; and 2011, $1,946,000.

(a) Compute Teridan’s total asset turnover for 2010 and 2011.

(b) Comment on Teridan’s efficiency in using its assets if its competitors average a total asset turnover of 3.0.

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.