During 2016,Ambiance Company reported net revenue of $3,600,000.The company reported net fixed assets of $710,000 on January 1,2016 and net fixed assets of $890,000 on December 31,2016.
Required:
Part a.Calculate the fixed asset turnover ratio.
Part b.Assume the 2016 fixed asset turnover ratio was lower than the 2015 ratio.Explain how an analyst might interpret this change.
Part c.Describe at least one circumstance that might have caused the fixed asset turnover ratio to decline and be consistent with bad news.
Part d.Describe at least one circumstance that might have caused the fixed asset turnover ratio to decline and yet be consistent with good news.

Question

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The Answer of During 2016,Ambiance Company reported net revenue of $3,600,000.The company reported net fixed assets of $710,000 on January 1,2016 and net fixed assets of $890,000 on December 31,2016.
Required:
Part a.Calculate the fixed asset turnover ratio.
Part b.Assume the 2016 fixed asset turnover ratio was lower than the 2015 ratio.Explain how an analyst might interpret this change.
Part c.Describe at least one circumstance that might have caused the fixed asset turnover ratio to decline and be consistent with bad news.
Part d.Describe at least one circumstance that might have caused the fixed asset turnover ratio to decline and yet be consistent with good news.

During 2016,Ambiance Company Reported Net Revenue of $3,600,000