Asset turnoverThree 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): AtlanticPacificMediterraneanSales$2,542,774 $6,497,743 $317,128 Average total assets977,990 1,326,070 453,040 a. Determine the asset turnover for all three companies. Round to one decimal place.Atlanticfill in the blank 1Pacificfill in the blank 2Mediterraneanfill in the blank 3b. 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.

The assets turnover ratio indicates the companies ability to use its assets for generating revenue. It can be calculated by dividing the sales by total average assets.Answer a. Assets turnover ratio = Sales / Average total assets Atlantic = 2,542,774 / 977,990 = 2.60 or 2.6 Pacific = 6,497,743 / 1,326,070 = 4.90 or 4.9 Mediterranean = 317,128 / 453,040 = 0.70 Answer b. If the sales are more then it means the firm is more efficient in using the assets. The answer is More or Greater.

Answered: Asset turnover Three major segments of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Asset turnover

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	$2,542,774		$6,497,743	$317,128
Average total assets	977,990		1,326,070	453,040

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.

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