Asked by Serena Takhar on Jun 24, 2024
Verified
The Wilson Company has provided the following information: • Net sales,$200,000
• Net operating income,$40,000
• Net income,$20,000
• Average total assets,$125,000
• Average net fixed assets;$80,000
What is Wilson's fixed asset turnover ratio?
A) 1.60
B) 2.50
C) 0.25
D) 0.50
Fixed Asset Turnover Ratio
This ratio measures how effectively a company uses its fixed assets to generate sales, calculated as net sales divided by average fixed assets.
Net Operating Income
A calculation used to analyze the profitability of income-generating real estate investments, which subtracts all operating expenses from all revenue generated from properties.
Average Net Fixed Assets
The average value of a company's property, plant, and equipment (PP&E) net of accumulated depreciation over a certain period.
- Calculate key financial ratios, such as the fixed asset turnover ratio, and understand their implications.
Verified Answer
= $200,000 / $80,000
= 2.50
Learning Objectives
- Calculate key financial ratios, such as the fixed asset turnover ratio, and understand their implications.
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