Fixed asset turnover ratio FedEx Corporation and United Parcel Service, Inc. com
ID: 2538350 • Letter: F
Question
Fixed asset turnover ratio FedEx Corporation and United Parcel Service, Inc. compete in the package delivery business. The major fixed assets for each business include aircraft, sorting and handling facilities, delivery vehicles, and information technology The sales and average book value of fixed assets reported on recent financial statements for each company were as follows: FedEx $47,453$58,363 20,213 18,317 ups Sales (in millions) Average book value of fixed assets (in millions) a. Compute the fixed asset turnover ratio for each company. Round to one decimal place. Fixed Asset Turnover Ratio FedEx UPS b. Which company appears more efficient in using fixed assets? c. The fixed asset turnover is a measure of how efficiently is generated from underlying fixed assets. is making a more efficient use of its fixed assests.Explanation / Answer
Fixed asset turnover = Sales / Fixed assets
Fedex = 47453 / 20213 = 2.35
UPS = 58363 / 18317 = 3.19
Company with higher fixed asset turnover uses its fixed assets more efficiently
The fixed asset turnover is a measure of how efficicntly revenue is generated from underlying fixed assets. UPS is making a more efficient use of fixed assets
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