Last year, Beecher Manufacturing had a 12.5% ROA, net income of $800,000, and net sales of $1,600,000. Given these values, what was the firm's asset turnover ratio?

0.20

0.25

0.45

0.50

Answer:

0.25

Step-by-step explanation

First of all, we will find the average total assets as follows

Average total assets = Net income / Return On Assets

= $800,000 / 0.125

= $6,400,000

Second, we then find the Asset Turnover ratio as below

Asset Turnover Ratio = Net Sales / Average total assets

= $1,600,000 / $6,400,000

= 0.25