27th Edition

ISBN: 9781337272094

Author: WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher: Cengage Learning,

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Textbook Question

Chapter 10, Problem 10.25EX

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)	$47,453	$58,363
Average book value of fixed assets (in millions)	20,213	18,317

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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Chapter 10 Solutions

Accounting

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Solution Summary: The author explains fixed asset turnover as a ratio that measures the productive capacity of the fixed assets to generate sales revenue for the company.

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Chapter 10 Solutions