Question

Newport Company has sales of $2,025,000 for the current year. The book value of its fixed assets at the beginning of the year was $550,000 and at the end of the year was $800,000. The fixed asset turnover ratio for Newport is

a. 3.0
b. 3.6
c. 3.7
d. 2.5

Answer 1

b because i am a 11 year old so ua

Answer 2

The fixed asset turnover ratio for Newport Company is calculated by dividing the sales of $2,025,000 by the average book value of fixed assets, which is $675,000. The result is a turnover ratio of 3.0, which is option (a).

Step-by-step explanation:

To calculate the fixed asset turnover ratio for the Newport Company, we use the formula:

Fixed Asset Turnover Ratio = Sales / Average Book Value of Fixed Assets

We are given that sales amount to $2,025,000 for the current year. The book value of fixed assets at the beginning of the year is $550,000, and at the end of the year, it is $800,000. To find the average book value of fixed assets, we add the beginning and ending book value and then divide by 2:

Average Book Value of Fixed Assets = ($550,000 + $800,000) / 2 = $1,350,000 / 2 = $675,000

Now we can calculate the fixed asset turnover ratio:

Fixed Asset Turnover Ratio = $2,025,000 / $675,000 = 3

Therefore, the fixed asset turnover ratio for Newport Company is 3.0, which corresponds to option (a).