Multiple Choice
XYZ Company had net sales of $500,000 and COGS of $320,000. If the beginning balance of Fixed Assets was $300,000 and the ending balance in Fixed Assets was $400,000, what is the Fixed Asset Turnover ratio?
14. Financial Statement Analysis
Ratios: Fixed Asset Turnover
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ABC Company had $200,000 in Net Sales and Gross Profit of $80,000. If Fixed Assets equaled $400,000, what is the Fixed Asset Turnover ratio?
A
0.2
B
0.5
C
2.0
D
2.5
Verified step by step guidance1
Understand the Fixed Asset Turnover ratio formula: Fixed Asset Turnover = Net Sales / Average Fixed Assets.
Identify the given values from the problem: Net Sales = $200,000 and Fixed Assets = $400,000.
Since the problem does not mention any changes in Fixed Assets, assume that the beginning and ending Fixed Assets are the same, making the Average Fixed Assets = $400,000.
Substitute the given values into the Fixed Asset Turnover formula: Fixed Asset Turnover = $200,000 / $400,000.
Simplify the expression to find the Fixed Asset Turnover ratio.
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