Answer:
1.42
Explanation:
The fixed asset turnover is a financial ratio that shows how much sales is generated by management for each $1 invested in fixed asset over the period. It is the ratio of sales to average fixed asset.
Average fixed asset is the sum of the beginning and ending fixed asset divided by 2.
Average fixed assets
= ($4.2 + $6.3)/2 (Amount in millions)
= $5.25 million
The company's fixed asset turnover ratio for 2018
= $7.4/$5.2
= 1.42
It means that the company makes a sales revenue of $1.42 for every $1 invested in fixed assets.
Answer:
3.15 times
Explanation:
It is ratio of Sales to the fixed asset of a company. It shows that how effectively the company using its fixed assets to generate the revenue. It measures the efficiency of the fixed asset in making sales.
It uses the net sales value and the average net fixed assets of the company.
According to given data
Assets 12/31/17 12/31/18
Property, plant and equipment $4.2 million $6.3 million
Licensing agreements $2.4 million $2.3 million
Goodwill $2.2 million $2.2 million
Investments $2.3 million $2.4 million
Total Fixed assets $2.3 million $2.4 million
Average Fixed Assets = ( $2.3 million + $2.4 million ) / 2 = 2.35 million
Net Sales = $7.4 million
Formula for Fixed Asset Turnover
Fixed Asset Turnover = Net Sales / Average Net Fixed Assets
Placing values in the formula
Fixed Asset Turnover = $7.4 million / $2.35 million = 3.15 times
