The asset turnover of a company is 7.2. The total assets of the company are $88,000. What were the company’s net sales?

The asset turnover ratio is calculated as:

\[
\text{Asset Turnover} = \frac{\text{Net Sales}}{\text{Total Assets}}
\]

Given that:
- **Asset Turnover** = 7.2
- **Total Assets** = $88,000

We can rearrange the formula to solve for **Net Sales**:

\[
\text{Net Sales} = \text{Asset Turnover} \times \text{Total Assets}
\]

Substitute the values:

\[
\text{Net Sales} = 7.2 \times 88,000 = 633,600
\]

Thus, the company's **Net Sales** were **$633,600**.

Would you like further details or have any questions?

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1. What is the significance of a high asset turnover ratio?
2. How does asset turnover impact a company’s profitability?
3. What other financial ratios are commonly analyzed alongside asset turnover?
4. How might a company improve its asset turnover ratio?
5. Why might two companies in the same industry have different asset turnover ratios?

**Tip:** A high asset turnover ratio often indicates efficient use of assets to generate sales, but it can vary significantly between industries.

Find the net sales of a company with an asset turnover ratio of 7.2 and total assets of $88,000. Learn to calculate net sales using the asset turnover formula, ideal for students in Grades 10-12 studying financial ratios and algebra.

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