Corporate Financial Accounting
15th Edition
ISBN: 9781337398169
Author: Carl Warren, Jeff Jones
Publisher: Cengage Learning
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Textbook Question
Chapter 9, Problem 9.4MAD
Compare FedEx and UPS
FedEx Corporation (FDX) and United Parcel Service, Inc. (UPS) 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) | $50365 |
$60,906 |
| Average book value of fixed assets (in millions) | 22,580 | 18,576 |
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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Students have asked these similar questions
Three major segments of the transportation industry are motor carriers such as YRC Worldwide, railroads such as Union Pacific, and transportation logistics services such as C.H. Robinson Worldwide, Inc. Recent financial statement information for these three companies follows (in thousands):
YRC
Union Pacific
C.H. Robinson
Sales
$5,092,000
$22,832,000
$16,631,172
Average total assets
1,601,300
58,476,500
4,331,623
a. Determine the asset turnover for all three companies. Round your answers to one decimal place.
YRC
fill in the blank 1
Union Pacific
fill in the blank 2
C.H. Robinson
fill in the blank 3
b. The ratio of sales to assets measures the number of sales dollars earned for each dollar of assets. The greater the number of sales dollars earned for every dollar of assets, the
efficient a firm is in using assets.
Read the following case and compute the fixed asset turnover ratio.Explain in your own words how the result of the turnover ratio of both companies is interpreted.La Flor de Mayo and La Rosa del Monte compete in the moving service sector. The greatest assets of these companies are moving trucks, warehouses and technological equipment. Sales and the average book value of fixed assets (book value) reported in the latest financial statements of each company is as follows:
La Flor de Mayo
La Rosa del Monte
Sales (in millions)
$12,320
$15,500
Average book value of fixed assets (in millions)
$7,000
$8,300
Three major segments of the transportation industry are motor carriers, such as Atlantic; railroads, such as Pacific; and transportation arrangement services, such as Mediterranean. Recent financial statement information for these three companies is shown as follows (in thousands of dollars):
Atlantic
Pacific
Mediterranean
Sales
$3,736,923
$4,993,352
$1,909,372
Average total assets
795,090
1,314,040
561,580
a. Determine the asset turnover for all three companies. Round to one decimal place.
Atlantic
fill in the blank 1
Pacific
fill in the blank 2
Mediterranean
fill in the blank 3
b. The ratio of sales to assets measures the number of sales dollars earned for each dollar of assets. The greater the number of sales dollars earned for every dollar of assets, the efficient a firm is in using assets.
Chapter 9 Solutions
Corporate Financial Accounting
Ch. 9 - ONeil Office Supplies has a fleet of automobiles...Ch. 9 - Prob. 2DQCh. 9 - Prob. 3DQCh. 9 - Distinguish between the accounting for capital...Ch. 9 - Immediately after a used truck is acquired, a new...Ch. 9 - Keyser Company purchased a machine that has a...Ch. 9 - Is it necessary for a business to use the same...Ch. 9 - A. Under what conditions is the use of an...Ch. 9 - For some of the fixed assets of a business, the...Ch. 9 - Prob. 10DQ
Ch. 9 - Straight-line depreciation A building acquired at...Ch. 9 - Units-of-activity depreciation A truck acquired at...Ch. 9 - Double-declining-balance depreciation A building...Ch. 9 - Revision of depreciation Equipment with a cost of...Ch. 9 - Capital and revenue expenditures On February 14,...Ch. 9 - Sale of equipment Equipment was acquired at the...Ch. 9 - Prob. 9.7BECh. 9 - Prob. 9.8BECh. 9 - Fixed asset turnover ratio Select financial...Ch. 9 - Costs of acquiring fixed assets Melinda Staffers...Ch. 9 - Prob. 9.2EXCh. 9 - Prob. 9.3EXCh. 9 - Nature of depreciation Tri-City Ironworks Co....Ch. 9 - Straight-line depreciation rates Convert each of...Ch. 9 - Straight-line depreciation A refrigerator used by...Ch. 9 - Depreciation by units-of-activity method A...Ch. 9 - Depreciation by units-of-activity method Prior to...Ch. 9 - Depreciation by two methods A Kubota tractor...Ch. 9 - Depreciation by two methods A storage tank...Ch. 9 - Partial-year depreciation Equipment acquired at a...Ch. 9 - Revision of depreciation A building with a exist...Ch. 9 - Capital and revenue expenditures Warner Freight...Ch. 9 - Prob. 9.14EXCh. 9 - Capital and revenue expenditures Quality Move...Ch. 9 - Capital expenditure and depreciation Willow Creek...Ch. 9 - Entries for sale of fixed asset Equipment acquired...Ch. 9 - Disposal of fixed asset Equipment acquired on...Ch. 9 - Prob. 9.19EXCh. 9 - Amortization entries Kleen Company acquired patent...Ch. 9 - Prob. 9.21EXCh. 9 - Balance sheet presentation List the errors you...Ch. 9 - Asset traded for similar asset A printing press...Ch. 9 - Prob. 9.24EXCh. 9 - Entries for trade of fixed asset On July 1, Twin...Ch. 9 - Entries for trade of fixed asset On October 1,...Ch. 9 - Prob. 9.1APRCh. 9 - Comparing three depreciation methods Dexter...Ch. 9 - Depreciation by three methods; partial years...Ch. 9 - Depreciation by two methods; sale of fixed asset...Ch. 9 - Transactions for fixed assets, including sale The...Ch. 9 - Amortization and depletion entries Data related to...Ch. 9 - Allocating payments and receipts to fixed asset...Ch. 9 - Comparing three depreciation methods Waylander...Ch. 9 - Depreciation by three methods; partial years...Ch. 9 - Depreciation by two methods; sale of fixed asset...Ch. 9 - Transactions for fixed assets, including sale The...Ch. 9 - Amortization and depletion entries Data related to...Ch. 9 - Compare Amazon.com to Netflix Amazon.com, Inc....Ch. 9 - Prob. 9.2MADCh. 9 - Analyze Verizon Verizon Communications Inc. (VZ)...Ch. 9 - Compare FedEx and UPS FedEx Corporation (FDX) and...Ch. 9 - Prob. 9.5MADCh. 9 - Prob. 9.1TIFCh. 9 - Communication Godwin Co. owns three delivery...Ch. 9 - Prob. 9.4TIF
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