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 facili-ties, delivery vehicles, and information technology. The sales and average book value offixed assets reported on recent financial statements for each company were as follows:FedExUPSSales (in millions)$47,453$58,363Average book value of fixed assets (in millions)20,21318,317a. Compute the fixed asset turnover ratio for each company. Round to one decimal place.b. Which company appears more efficient in using fixed assets?Interpret the meaning of the ratio for the more efficient company.C.

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Asked Dec 17, 2019
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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 facili-
ties, 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
UPS
Sales (in millions)
$47,453
$58,363
Average book value of fixed assets (in millions)
20,213
18,317
a. Compute the fixed asset turnover ratio for each company. Round to one decimal place.
b. Which company appears more efficient in using fixed assets?
Interpret the meaning of the ratio for the more efficient company.
C.
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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 facili- ties, 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 UPS Sales (in millions) $47,453 $58,363 Average book value of fixed assets (in millions) 20,213 18,317 a. Compute the fixed asset turnover ratio for each company. Round to one decimal place. b. Which company appears more efficient in using fixed assets? Interpret the meaning of the ratio for the more efficient company. C.

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Expert Answer

Step 1

a.

 

Calculate the fixed asset turnover ratio:

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FedEx Corporation: Sales= $47,453 millions Total average fixed assets= $20,213 millions Sales Fixed Assets Turnover = Average Fixed Assets $47,453 $20,213 - 2.3 times United Parcel Service Incorporation: Sales= $58,363 millions Total average fixed assets= $18,317 millions Sales Average Fixed Assets Fixed Assets Turnover $58,363 $18,317 3.2 times

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Step 2

b. United Parcel Service Incorporation appears to be more efficient in using fixed assets. This is because, its fixed turnover ratio of 3.2 times is more than the ratio of FedEx Corporation...

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