Windswept, Inc. 2010 Income Statement (5 in millions) Net sales Less: Cost of go

Question

Windswept, Inc. 2010 Income Statement (5 in millions) Net sales Less: Cost of goods solcd Less: Depreclation Earnings before Interest and taxes ess: Interest paid Taxable Income Less: Taxes Net Income $13,850 8,100 51 $524 10 $5,134 1,79 $3,33 Windswept, Inc. 2009 and 2010 Balance Sheets ($ In millions 2009 2010 $1,940 $191 1100 1,42 $3,420 $ 3,070 290 $320Accounts payable Cash Accounts rec. Inventory Total Net fixed assets Total assets 170 1,070Long-term debt 2,090 1,780 Common stock 3,550 $3,170 Retalned earnings 3,590 4,16 $7140 $7,330 Total llab. &equity $7,140 $7,33 68 93 What is the fixed asset turnover? (use 2010 values)

Explanation / Answer

Fxed asset turnover ratio is the ratio of sales to the average value of fixed assets. It indicates how well the business is using its fixed assets to generate sales.

A declining ratio may indicate that the business is over-invested in plant, equipment or other fixed assets.

Fixed asset turnover ratio = Net sales / average fixed assets

Net sales = 13850

Fixed assest (2009) = 3590

Fixed assets (2010) = 4160

Average fixed assets = (3590 + 4160)/2 = 3875

Fixed asset turnover ratio = 13850 / 3875 = 3.57

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.