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
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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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