Chapter 9, Problem 2ADM

Verizon: Fixed asset turnover ratio

Verizon Communications Inc. is a major telecommunications company in the United States. Two recent balance sheets for Verizon disclosed the following information regarding fixed assets:

	End of Year (in millions)	Beginning of Year (in millions)
Property, plant, and equipment	$220,865	$ 209,575
Accumulated depreciation	(131,909)	(120,933)
Property, plant, and equipment (net)	$ 88,956	$ 88,642

Verizon’s revenue for the year was $120,550 million. Assume the fixed asset turnover ratio for the telecommunications industry averages approximately 1.1.

• A. Determine Verizon’s fixed asset turnover ratio. (Round to one decimal place.)
• B. Interpret this ratio with respect to the industry average.