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29 August, 14:54

The following information was reported by Young's Air Cargo Service for 2017: Net fixed assets (beginning of year) $ 1,860,000 Net fixed assets (end of year) 2,280,000 Net operating revenues for the year 3,230,000 Net income for the year 1,600,000 Compute the company's fixed asset turnover ratio for the year. (Round your answer to 2 decimal places.)

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  1. 29 August, 14:57
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    1.56

    Explanation:

    Data provided in the question:

    Net fixed assets (beginning of year) = $1,860,000

    Net fixed assets (end of year) = $2,280,000

    Net operating revenues for the year = $3,230,000

    Net income for the year = $1,600,000

    Now,

    company's fixed asset turnover ratio for the year

    = Net operating revenues : Average total assets

    Also,

    Average total assets

    = [Net fixed assets (beginning of year) + Net fixed assets (end of year) ] : 2

    = [ $1,860,000 + $2,280,000 ] : 2

    = $2,070,000

    Therefore,

    Company's fixed asset turnover ratio for the year

    = $3,230,000 : $2,070,000

    = 1.56
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