Accounting
27th Edition
ISBN: 9781337272094
Author: WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher: Cengage Learning,
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Textbook Question
Chapter 10, Problem 10.23EX
Fixed asset turnover ratio
Amazon.com, Inc. is the world's leading Internet retailer of merchandise and media. Amazon also designs and sells electronic products, such as e-readers. Netflix, Inc. is the world's leading Internet television network. Both companies compete in the digital media and streaming space. However, Netflix is more narrowly focused in the digital streaming business than is Amazon. Sales and average book value of fixed assets information (in millions) are provided for Amazon and Netflix for a recent year as follows:
| Amazon | Netflix | |
| Sales | $107,006 | $6,780 |
| Average book value of fixed assets | 19,403 | 162 |
- a. Compute the fixed asset n1rnover ratio for each company. Round to one decimal place.
- b. Which company is more efficient in generating sales from fixed assets?
- c. Interpret your results.
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Asset Management ratios
2002
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Industry Average
Inventory Turnover
4.80
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4.10
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Chapter 10 Solutions
Accounting
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