Accounting (Text Only)
26th Edition
ISBN: 9781285743615
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 10, Problem 10.9APE
a)
To determine
Fixed Asset turnover:
It is a ratio that measures the productive capacity of the fixed assets to generate the sales revenue for the company. Thus, it shows the relationship between the net sales and the average total fixed assets. The following is the formula to calculate the ratio:
the fixed asset Turnover Ratio of Company D for 2015 and 2016.
b)
To determine
To explain: whether the change in the fixed asset turnover ratio from 2015 to 2016 indicates a favorable or unfavorable change.
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What is the comparison (analysis) of the Fixed Asset Turnover Ratio of Industry Average Ratio and the Company A Ratio? The Fixed Asset Turnover Ratio has decreased and increased. Why?
Industry Average Fixed Asset Turnover Ratio
2015: 3.00
2016: 3.18
2017: 3.58
2018: 2.23
2019: 2.94
Company A Fixed Asset Turnover Ratio
2015: 7.48
2016: 6.14
2017: 7.70
2018: 4.59
2019: 6.38
Using the information below to answer the following parts A and B. Round to 2 decimal places.
2018
2017
2016
Total assets
22,536
23,259
21,396
Sales
36,397
34,350
32,376
A. Calculate the Asset turnover for 2017 and 2018.
B. Is the change from 2017 to 2018 favorable or unfavorable? Explain your answer.
The 2017 annual report of Tootsie Roll Industries contains the following information.
(in millions)
December 31, 2017
0000
December 31, 2016
Total assets
$930.9
$920.1
Total liabilities
197.1
208.6
Net sales
515.7
517.4
Net income
80.7
67.2
Instructions
Compute the following ratios for Tootsie Roll for 2017.
a. Asset turnover.
b. Return on assets.
c. Profit margin on sales.
d. How can the asset turnover be used to compute the return on assets?
Chapter 10 Solutions
Accounting (Text Only)
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