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Analyze and compare CSX, Union Pacific, and YRC Worldwide CSX Corporation (CSX) and Union Pacific Corporation (UNP) are major railroads, operating primarily in the eastern and western portion of the United States, respectively. YRC Worldwide Inc. (YRCW) is one of the largest trucking companies in the United States. The sales and total assets (in millions) for a recent year for each company are as follows: a. Compute the asset turnover ratio for each company. Round to two decimal places. b. Which of the two railroad companies is more efficient in generating revenues from its assets? c. How does YRC’s asset turnover ratio compare to the two railroads? Why?

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Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663

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Chapter
Section
BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663
Chapter 5, Problem 4MAD
Textbook Problem
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Analyze and compare CSX, Union Pacific, and YRC Worldwide

CSX Corporation (CSX) and Union Pacific Corporation (UNP) are major railroads, operating primarily in the eastern and western portion of the United States, respectively. YRC Worldwide Inc. (YRCW) is one of the largest trucking companies in the United States.

The sales and total assets (in millions) for a recent year for each company are as follows:

Chapter 5, Problem 4MAD, Analyze and compare CSX, Union Pacific, and YRC Worldwide CSX Corporation (CSX) and Union Pacific

  1. a. Compute the asset turnover ratio for each company. Round to two decimal places.
  2. b. Which of the two railroad companies is more efficient in generating revenues from its assets?
  3. c. How does YRC’s asset turnover ratio compare to the two railroads? Why?

a.

To determine

Calculate the asset turnover ratio for each company.

Explanation of Solution

Asset turnover ratio: Asset turnover ratio measures the productive capacity of the total assets to generate the sales revenue for the company. Thus, it shows the relationship between the net sales and the average total assets.

Calculate the asset turnover ratio for Company CSX.

Asset turnover ratio = TotalsalesAverage assets= Totalsales(Assets at the beginning of the year+Assets at the ending of the year+2)=$11,069($34,745+$35,4142)=0.32

Calculate the asset turnover ratio for Company UP.

Asset turnover ratio = TotalsalesAverage assets= Totalsales(Assets at the beginning of the year+

b.

To determine

Identify the railroad company, which is more efficient in generating revenues from its assets.

c.

To determine

Explain the way in which Company YRC’s asset turnover ratio can be compared to the two other companies.

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Chapter 5 Solutions

Financial And Managerial Accounting
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