Fixed Asset turnover: It is a ratio that measures the productive capacity of the fixed assets to generate the sales revenue for the company. Thus, it shows the relationship between the net sales and the average total fixed assets. The following is the formula to calculate the ratio: Fixed Asset turnover = Sales Average total fixed assets the fixed asset Turnover Ratio of Company D for 2015 and 2016.

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Answer 1

Question

Chapter 10, Problem 10.9APE

a)

To determine

Fixed Asset turnover:

It is a ratio that measures the productive capacity of the fixed assets to generate the sales revenue for the company. Thus, it shows the relationship between the net sales and the average total fixed assets. The following is the formula to calculate the ratio:

Fixed Asset turnover =SalesAverage total fixed assets

the fixed asset Turnover Ratio of Company D for 2015 and 2016.

b)

To determine

To explain: whether the change in the fixed asset turnover ratio from 2015 to 2016 indicates a favorable or unfavorable change.

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8. Trend Ratios, Application of some Financial Ratios and their Interpretation Some of the balance sheet and income statement figures of Sapphire Mfg. CO. for 2016, 2017 and 20181 are as follows. 2018 P30,000 2016 2017 Quick assets P40,000 P48,000 65,000 25,000 80,000 50,000 Current assets 50,000 40,000 110,000 200,000 Investments 160,000 135,000 Plants, property and equipment, net Total assets 250,000 265,000 Current liabilities 45,000 50,000 100,000 75,000 Long Term debt Total stockholders' equity 40,000 50,000 105,000 125,000 125,000 Total liabilities and stockholders' Equity 200,000 400,000 240,000 250,000 265,000 Sales 375,000 500,000 Cost of goods sold Operating expenses (including Depreciation of P10,000) 255,000 290,000 110,000 95,000 105,000 Net income 50,000 50,000 130,000 a) Compute for the trend ratios based on the above given data and give your interpretation of the 2017 and 2018 figures.

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Financial statement data for years ending December 31, 2019 and 2018, for Latchkey Company follow: 2019 2018 Sales $1,734,000 $1,645,000 Total assets: Beginning of year End of year 480,000 460,000 540,000 480,000 a. Determine the asset turnover for 2019 and 2018. b. Does the change in the asset turnover from 2018 to 2019 indicate a favorable or an unfavorable trend?

Answer 2

Question

Chapter 10, Problem 10.9APE

a)

To determine

Fixed Asset turnover:

It is a ratio that measures the productive capacity of the fixed assets to generate the sales revenue for the company. Thus, it shows the relationship between the net sales and the average total fixed assets. The following is the formula to calculate the ratio:

Fixed Asset turnover =SalesAverage total fixed assets

the fixed asset Turnover Ratio of Company D for 2015 and 2016.

b)

To determine

To explain: whether the change in the fixed asset turnover ratio from 2015 to 2016 indicates a favorable or unfavorable change.

Expert Solution & Answer

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Answer 3

Question

Chapter 10, Problem 10.9APE

a)

To determine

Fixed Asset turnover:

It is a ratio that measures the productive capacity of the fixed assets to generate the sales revenue for the company. Thus, it shows the relationship between the net sales and the average total fixed assets. The following is the formula to calculate the ratio:

Fixed Asset turnover =SalesAverage total fixed assets

the fixed asset Turnover Ratio of Company D for 2015 and 2016.

b)

To determine

To explain: whether the change in the fixed asset turnover ratio from 2015 to 2016 indicates a favorable or unfavorable change.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 4

Question

Chapter 10, Problem 10.9APE

a)

To determine

Fixed Asset turnover:

It is a ratio that measures the productive capacity of the fixed assets to generate the sales revenue for the company. Thus, it shows the relationship between the net sales and the average total fixed assets. The following is the formula to calculate the ratio:

Fixed Asset turnover =SalesAverage total fixed assets

the fixed asset Turnover Ratio of Company D for 2015 and 2016.

b)

To determine

To explain: whether the change in the fixed asset turnover ratio from 2015 to 2016 indicates a favorable or unfavorable change.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 5

Chapter 10, Problem 10.9APE

a)

To determine

Fixed Asset turnover:

It is a ratio that measures the productive capacity of the fixed assets to generate the sales revenue for the company. Thus, it shows the relationship between the net sales and the average total fixed assets. The following is the formula to calculate the ratio:

Fixed Asset turnover =SalesAverage total fixed assets

the fixed asset Turnover Ratio of Company D for 2015 and 2016.

b)

To determine

To explain: whether the change in the fixed asset turnover ratio from 2015 to 2016 indicates a favorable or unfavorable change.

Answer 6

Chapter 10, Problem 10.9APE

a)

To determine

Fixed Asset turnover:

It is a ratio that measures the productive capacity of the fixed assets to generate the sales revenue for the company. Thus, it shows the relationship between the net sales and the average total fixed assets. The following is the formula to calculate the ratio:

Fixed Asset turnover =SalesAverage total fixed assets

the fixed asset Turnover Ratio of Company D for 2015 and 2016.

Answer 7

Chapter 10, Problem 10.9APE

a)

To determine

Fixed Asset turnover:

It is a ratio that measures the productive capacity of the fixed assets to generate the sales revenue for the company. Thus, it shows the relationship between the net sales and the average total fixed assets. The following is the formula to calculate the ratio:

Fixed Asset turnover =SalesAverage total fixed assets

the fixed asset Turnover Ratio of Company D for 2015 and 2016.

Answer 8

b)

To determine

To explain: whether the change in the fixed asset turnover ratio from 2015 to 2016 indicates a favorable or unfavorable change.

Answer 9

b)

To determine

To explain: whether the change in the fixed asset turnover ratio from 2015 to 2016 indicates a favorable or unfavorable change.

Answer 10

Expert Solution & Answer

Answer 11

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Answer 12

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Answer 13

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

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To explain: whether the change in the fixed asset turnover ratio from 2015 to 2016 indicates a favorable or unfavorable change.

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