Managerial Accounting - With Access
3rd Edition
ISBN: 9781259847424
Author: Whitecotton
Publisher: MCG
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Chapter 13, Problem 2.5GAP
To determine
Introduction:
Asset turnover ratio calculates the ability of a company to generate sales with the fixed assets. A decline in the ratio means company has overinvested the amount in the fixed assets.
To calculate:
The fixed asset turnover ratio for previous and current year and comment on the same.
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Students have asked these similar questions
McDonald’s Corporation (MCD) reported the following balance sheet and income statement data for two recent years: (amounts are in $ millions)
                      Total assets        Net Income             SalesYear 1:           $33,803.70         $5,192.30          $22,820.40Year 2:           $32,811.20         $5,924.30          $21,025.20
What was McDonald’s asset turnover ratio for Year 2?
Return on Assets Ratio and Asset Turnover Ratio
Northern Systems reported the following financial data (in millions) in its annual report:
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Previous Year
Current Year
Net Income
$9,050
$7,500
Net Sales
52,350
37,200
Total Assets
58,734
68,128
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If the company’s total assets are $55,676 at the beginning of the previous year, calculate the company’s:
(a) return on assets (round answers to one decimal place - ex: 10.7%) Â
(b) asset turnover for both years (round answers to two decimal places)
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Previous Year
Current Year
a.
Return on Assets Ratio
Answer
Answer
b.
Asset Turnover Ratio
Answer
Answer
Fixed asset turnover ratio
Select financial statement data for two recent years for Davenport Company are as follows:
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20Y5
20Y4
Sales
$1,800,000
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$1,170,000
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Fixed assets:
Â
Â
Â
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Beginning of year
690,000
Â
610,000
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End of year
750,000
Â
690,000
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a. Determine the fixed asset turnover ratio for 20Y4 and 20Y5. Round to one decimal place.
Â
20Y5
20Y4
Fixed Asset Turnover Ratio
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      Â
b. Does the change in the fixed asset turnover ratio from 20Y4 to 20Y5 indicate a favorable or an unfavorable change?
Chapter 13 Solutions
Managerial Accounting - With Access
Ch. 13 - Prob. 1QCh. 13 - Prob. 2QCh. 13 - What is ratio analysis? Why is it useful?
Ch. 13 - What benchmarks are commonly used for interpreting...Ch. 13 - Prob. 5QCh. 13 - Why are some analyses called horizontal and others...Ch. 13 - Slow Cellar’s current ratio increased from 1.2 to...Ch. 13 - From last year to this year. Colossal Company’s...Ch. 13 - From last year to this year, Berry Barn reported...Ch. 13 - Prob. 10Q
Ch. 13 - Prob. 1MCCh. 13 - Prob. 2MCCh. 13 - Prob. 3MCCh. 13 - Prob. 4MCCh. 13 - Prob. 5MCCh. 13 - Prob. 6MCCh. 13 - Prob. 7MCCh. 13 - Prob. 8MCCh. 13 - Prob. 9MCCh. 13 - Prob. 1MECh. 13 - Prob. 2MECh. 13 - Prob. 3MECh. 13 - Prob. 4MECh. 13 - Prob. 5MECh. 13 - Prob. 6MECh. 13 - Prob. 7MECh. 13 - Prob. 8MECh. 13 - Prob. 9MECh. 13 - Prob. 10MECh. 13 - Prob. 11MECh. 13 - Prob. 12MECh. 13 - Prob. 13MECh. 13 - Prob. 14MECh. 13 - Prob. 1ECh. 13 - Prob. 2ECh. 13 - Prob. 3ECh. 13 - Prob. 4ECh. 13 - Prob. 5ECh. 13 - Prob. 6ECh. 13 - Prob. 7ECh. 13 - Computing and Interpreting Liquidity Ratios...Ch. 13 - Prob. 9ECh. 13 - Prob. 10ECh. 13 - Prob. 11ECh. 13 - Prob. 12ECh. 13 - Prob. 13ECh. 13 - Analyzing the Impact of Selected Transactions on...Ch. 13 - Prob. 15ECh. 13 - Prob. 1.1GAPCh. 13 - Prob. 1.2GAPCh. 13 - Prob. 2.1GAPCh. 13 - Prob. 2.2GAPCh. 13 - Prob. 2.3GAPCh. 13 - Prob. 2.4GAPCh. 13 - Prob. 2.5GAPCh. 13 - Prob. 2.6GAPCh. 13 - Prob. 2.7GAPCh. 13 - Prob. 2.8GAPCh. 13 - Prob. 3.1GAPCh. 13 - Prob. 3.2GAPCh. 13 - Prob. 3.3GAPCh. 13 - Prob. 4.1GAPCh. 13 - Prob. 4.2GAPCh. 13 - Prob. 4.3GAPCh. 13 - Prob. 5.1GAPCh. 13 - Prob. 5.2GAPCh. 13 - Prob. 5.3GAPCh. 13 - Prob. 5.4GAPCh. 13 - Prob. 6.1GAPCh. 13 - Prob. 6.2GAPCh. 13 - Prob. 7GAPCh. 13 - Prob. 1.1GBPCh. 13 - Prob. 1.2GBPCh. 13 - Prob. 2.1GBPCh. 13 - Prob. 2.2GBPCh. 13 - Prob. 2.3GBPCh. 13 - Prob. 2.4GBPCh. 13 - Prob. 2.5GBPCh. 13 - Prob. 2.6GBPCh. 13 - Prob. 2.7GBPCh. 13 - Prob. 2.8GBPCh. 13 - Prob. 3.1GBPCh. 13 - Prob. 3.2GBPCh. 13 - Prob. 3.3GBPCh. 13 - Prob. 4.1GBPCh. 13 - Prob. 4.2GBPCh. 13 - Prob. 4.3GBPCh. 13 - Prob. 5.1GBPCh. 13 - Prob. 5.2GBPCh. 13 - Prob. 5.3GBPCh. 13 - Prob. 5.4GBPCh. 13 - Prob. 6.1GBPCh. 13 - Prob. 6.2GBPCh. 13 - Prob. 7GBP
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- Compare Dollar Tree and Dollar General The asset turnover ratios for two recent years for Dollar Tree, Inc. (DLTR) are shown in the Analysis for Decision Making section of this chapter. Using your results from MAD 5-2, compare and interpret the asset turnover ratios for Dollar Tree and Dollar General (DG).arrow_forwardAsset Efficiency Ratios Refer to financial statements in Exercise 12-76 and the information below. Required: 1. Compute the three asset efficiency ratios (rounded to two decimal places) for 2018 and 2019. 2. Indicate the length of Steeles operating cycle in days (rounded to two decimal places) for the years ended December 31, 2019. and December 31, 2018.arrow_forwardAsset Efficiency Ratios Selected financial statement numbers for Rutherford Company follow. Required: 1. Using this information, calculate Rutherfords receivable turnover ratio (rounded to two decimal places.) 2. Using this information, calculate Rutherfords asset turnover ratio (rounded to two decimal places) and also convert the ratio into days (rounded to the nearest whole day).arrow_forward
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