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Ratio of sales to assets Three major segments of the transportation industry are motor carriers, such as YRC Worldwide ; railroads, such as Union Pacific; and transportation arrangement services, such as C.H. Robinson Worldwide Inc. Recent financial statement information for these three companies is shown as follows (in thousands of dollars): a. Determine the ratio of sales to assets for all three companies. Round to one decimal place. b. Assume that the ratio of sales to assets for each company represents their respective industry segment. Interpret the differences in the ratio of sales to assets in terms of the operating characteristics of each of the respective segments.
Accounting (Text Only)
Solutions
Accounting (Text Only)
Ratio of sales to assets
Three major segments of the transportation industry are motor carriers, such as YRC Worldwide; railroads, such as Union Pacific; and transportation arrangement services, such as C.H. Robinson Worldwide Inc. Recent financial statement information for these three companies is shown as follows (in thousands of dollars):
a. Determine the ratio of sales to assets for all three companies. Round to one decimal place.
b. Assume that the ratio of sales to assets for each company represents their respective industry segment. Interpret the differences in the ratio of sales to assets in terms of the operating characteristics of each of the respective segments.
a)
Financial Ratios: Financial ratios are the metrics used to evaluate the liquidity, capabilities, profitability, and overall performance of a company.
To compute: Asset turnover ratio for all three companies
Given info: Sales and average total assets
Explanation of Solution
Asset turnover ratio is used to determine the asset’s efficiency towards sales. Asset turnover ratio is determined by dividing sales and average total assets.
Formula:
b)
To interpret: The differences in asset turnover.
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