FedEx and UPS: Fixed asset turnover ratio
FedEx Corporation and United Parcel Service, Inc. compete in the package delivery business. The major fixed assets for each business include aircraft, sorting and handling facilities, delivery vehicles, and information technology. The sales and average book value of fixed assets reported on recent financial statements for each company were as follows:
FedEx | UPS | |
Sales (in millions) | $45,567 | $55,438 |
Average book value of fixed assets (in millions) | 19,017 | 17,927 |
- A. Compute the fixed asset turnover ratio for each company. (Round to one decimal place.)
- B. Which company appears more efficient in using fixed assets?
- C. Interpret the meaning of the ratio for the more efficient company.
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