The company has net sales revenue of $3.6 million during 2016.The company's records also included the following information:

What is the company's fixed asset turnover ratio for 2016?
A) 18.00
B) 1.33
C) 1.00
D) 1.50

Question

The company has net sales revenue of $3.6 million during 2016.The company's records also included the following information:

What is the company's fixed asset turnover ratio for 2016?
A) 18.00 
B) 1.33 
C) 1.00 
D) 1.50

Quizplus · Accepted Answer

Fixed Asset Turnover Ratio = Net Sales / Average Fixed Assets
Average Fixed Assets = (Beginning Fixed Assets + Ending Fixed Assets) / 2
Average Fixed Assets = ($2,500,000 + $2,000,000) / 2 = $2,250,000
Fixed Asset Turnover Ratio = $3,600,000 / $2,250,000 = 1.6
Therefore, the company's fixed asset turnover ratio for 2016 is 1.6, which is closest to option D (1.50).

The Company Has Net Sales Revenue of $3