CengageNOWv2, 1 term Printed Access Card for Warren's Survey of Accounting, 8th
8th Edition
ISBN: 9781305961982
Author: Carl Warren
Publisher: Cengage Learning
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Question
Chapter 7, Problem 7.6.1MBA
To determine
Concept Introduction:
Asset Turnover Ratio:
Asset Turnover Ratio is an efficiency ratio that represents the sales earned on the average assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Asset Turnover Ratio is as follows:
To Calculate:
The Asset Turnover Ratio
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Asset turnover ratio
Financial statement data for years ended December 31, 20Y3 and 20Y2, for Edison Company follow:
20Y3
20Y2
Sales
$1,950,000
$1,564,000
Total assets:
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740,000
620,000
End of year
820,000
740,000
a.
Determine the asset turnover ratio for 20Y3 and 20Y2. Round answers to one decimal place.
20Y3
20Y2
Asset turnover
fill in the blank 1
fill in the blank 2
b.
Is the change in the asset turnover ratio from 20Y2 to 20Y3 favorable or unfavorable?
Asset turnover
United Continental Holdings, Inc., (UAL), operates passenger service throughout the world. The following data (in millions) were adapted from a recent financial statement of United.
Sales (revenue)
$38,901
Average property, plant, and equipment
17,219
Average intangible assets
8,883
1. Compute the asset turnover. Round your answer to two decimal places.fill in the blank 1
2. If Delta, has a recent asset turnover of 1.11, United Continental Holdings, Inc. is generating __________ more sales per average dollar of invested long-term operating assets than Delta. (Options: $1.49, $1.73. $1,995, $0.38)
The following information is available from the annual reports of Blossom Company and Crane Company.
(Amounts in millions)
Blossom
Crane
Net Income
$1,824
$2,413
Sales
43,035
64,239
Total Assets (average)
40,242
68,704
Based on the preceding information, compute the following values for each company: (Round asset turnover ratio to 2 decimal places, e.g. 15.25 and return on assets to 1 decimal place, e.g. 15.2%.)
BlossomCrane1.
Asset turnover ratio
enter the asset turnover rounded to 1 decimal placetimesenter the asset turnover rounded to 1 decimal placetimes2.
Return on assets
enter the return on assets in percentages rounded to 2 decimal places%enter the return on assets in percentages rounded to 2 decimal places%
Chapter 7 Solutions
CengageNOWv2, 1 term Printed Access Card for Warren's Survey of Accounting, 8th
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