Three major segments of the transportation industry are motorcarriers, such as Y

Question

Three major segments of the transportation industry are motorcarriers, such as YRC Worldwide; railroads, such as Union Pacific;and transportation arrangement services, such as C.H. RobinsonWorldwide Inc. Recent financial statement information forthese three companies is shown as follows (in thousands ofdollars):

                                               YRC                                                               C.H. Robinson

                                               Worldwide                 UnionPacific             Worldwide

NetSales                                6,767,485                   12,215,000                 4,341,538                                           

Average totalassets               3,545,199                   34,041,500                 994,423

(Note: YRC Worldwide, 1.9)

Explanation / Answer

YRC Worldwide Ratio of net sales toassets     = Net sales / Average total assets           = 6767485 / 3545199           = 1.9 Union Pacific Ratio of net sales toassets     = 12,215,000 / 34,041,500           = 0.35 or 0.4 C.H.Robinson worldwide Ratio of net sales toassets     = 4,341,538 / 994,423           = 4.36 or 4.4 This ratio is useful to determine theamount of sales that are generated from each dollar of assets. As noted above companies withlow profit margin tend to have high asset turnover those with high profit margins have lowasset turnover. YRC Worldwide asset turnover seems tobe high then it makes a low profit margin. UnionPacific's asset turnover seema tobe relatively very low, meaning that it makes a high profit margin C.H.Robinson Worldwide asset turnoverseems to be high then it makes a low profit margin.

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