Multiple Choice
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?
14. Financial Statement Analysis
Ratios: Fixed Asset Turnover
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?
A
0.51
B
1.25
C
1.43
D
1.67
Verified step by step guidance1
Understand the Fixed Asset Turnover ratio formula: Fixed Asset Turnover = Net Sales / Average Fixed Assets.
Calculate the average fixed assets: Average Fixed Assets = (Beginning Fixed Assets + Ending Fixed Assets) / 2.
Substitute the given values into the average fixed assets formula: Average Fixed Assets = (\$300,000 + \$400,000) / 2.
Substitute the net sales and average fixed assets into the Fixed Asset Turnover formula: Fixed Asset Turnover = \$500,000 / Average Fixed Assets.
Simplify the expression to find the Fixed Asset Turnover ratio.
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