Question

The company has net sales revenue of $4.2 million during 2018. The company's records also included the following information: Assets 12/31/17 12/31/18 Property, plant and equipment $ 2.6 million $ 3.1 million Licensing agreements $ 0.8 million $ 0.7 million Goodwill $ 0.6 million $ 0.6 million Investments $ 0.7 million $ 0.8 million What is the company's fixed asset turnover ratio for 2018

Answer 1

The fixed assets turnover is for 2018 is 1.47

Step-by-step explanation:

Fixed asset turnover=net sales/average fixed assets

net sales is $4.2 million

average fixed assets=opening fixed assets+closing fixed assets/2

opening fixed assets is $2.6 million

closing fixed assets is $3.1 million

average fixed assets=$2.6 million+$3.1 million/2

=$2.85 million

fixed assets turnover=$4.2 million/$2.85 million

=1.47

Answer 2

1.474

Step-by-step explanation:

Fixed Assets Turnover ratio =Net Sales/Average Fixed Assets

Fixed Assets opening 2.6

Fixed Assets closing 3.1

Total fixed assets 5.7/2=2.85

by putting values in above formula we get=4.2/2.85=1.474

In fixed assets we only account for property plant and equipment.where as the good will and licensing agreements are intangible assets