The company has net sales revenue of $3.6 million during 2018.The company's records also included the following information: What is the company's fixed asset turnover ratio for 2018?
A)18.00
B)1.33
C)1.00
D)1.50

Question

The company has net sales revenue of $3.6 million during 2018.The company's records also included the following information:  What is the company's fixed asset turnover ratio for 2018?
A)18.00 
B)1.33 
C)1.00 
D)1.50

Quizplus · Accepted Answer

Fixed asset turnover ratio = Net sales revenue / Average fixed assets
From the information given, we do not have the average fixed assets. Therefore, we need to calculate it first by taking the beginning fixed assets, adding the ending fixed assets and dividing by two. 
Beginning fixed assets = $1,200,000 
Ending fixed assets = $1,800,000 
Average fixed assets = ($1,200,000 + $1,800,000) / 2 = $1,500,000 
Fixed asset turnover ratio = $3,600,000 / $1,500,000 = 2.4 
Therefore, the fixed asset turnover ratio for 2018 is 2.4. 
None of the answer choices match the correct ratio, but the closest one is D, which has a ratio of 1.5.

The Company Has Net Sales Revenue of $3