ExpertMedium2 marksShort Answer
ACCA · Question 35 · Performance measurement
Section A
SwiftLogistics, a courier service, has the following financial data for the year:
- Revenue: $2,500,000
- Non-current assets: $800,000
- Current assets: $300,000
- Current liabilities: $100,000
Calculate the Asset Turnover ratio for the year.
(Enter your answer as a decimal to one decimal place, e.g., 1.5)
Section A
SwiftLogistics, a courier service, has the following financial data for the year:
- Revenue: $2,500,000
- Non-current assets: $800,000
- Current assets: $300,000
- Current liabilities: $100,000
Calculate the Asset Turnover ratio for the year.
(Enter your answer as a decimal to one decimal place, e.g., 1.5)
How to approach this question
1. Calculate Capital Employed (Total Assets - Current Liabilities). Total Assets = 800k + 300k = 1,100k. Capital Employed = 1,100k - 100k = 1,000k.
2. Calculate Asset Turnover: Revenue / Capital Employed.
3. 2,500,000 / 1,000,000.
Full Answer
Capital Employed = Non-current assets + Current assets - Current liabilities
Capital Employed = $800,000 + $300,000 - $100,000 = $1,000,000.
Asset Turnover = Revenue / Capital Employed
Asset Turnover = $2,500,000 / $1,000,000 = 2.5 times.
Common mistakes
Dividing Revenue by Total Assets ($1,100,000) without deducting current liabilities, resulting in 2.27.
Practice the full ACCA MA — Management Accounting Practice Exam 6
38 questions · hints · full answers · grading
More questions from this exam
Q01**Section A**
Global Wildlife Trust, an international NGO, is deciding whether to expand its con...EasyQ02**Section A**
CloudSync, a rapidly growing SaaS tech startup, monitors the daily server uptime a...EasyQ03**Section A**
AgriGrow operates a network of automated hydroponic farms. The management accounta...MediumQ04**Section A**
A municipal water treatment plant utilizes both financial accounting and managemen...EasyQ05**Section A**
In a boutique consulting firm, management relies heavily on quantitative variance ...Medium