Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Question
Chapter 9, Problem 2MAD
(a)
To determine
Determine Company V’s fixed asset turnover ratio.
(b)
To determine
Determine the airlines that is most efficient in the use of its fixed assets.
(c)
To determine
Determine the factors that might influence the efficient use of fixed assets for an airline.
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Asset management ratios are used to measure how effectively a firm manages its assets, by relating the amount a firm has invested in a particular
type of asset (or group of assets) to the amount of revenues the asset is generating. Examples of asset management ratios include the average
collection period (also called the days sales outstanding ratio), the inventory turnover ratio, the fixed asset turnover ratio, and the total asset turnover
ratio.
Consider the following case:
Walker Telecommunications has a quick ratio of 2.00x, $35,550 in cash, $19,750 in accounts receivable, some inventory, total current
assets of $79,000, and total current liabilities of $27,650. The company reported annual cost of goods sold of $200,000 in the most
recent annual report.
Over the past year, how often did Walker Telecommunications sell and replace its inventory?
○ 9.28 x
2.86 x
8.01 x
8.44 x
The inventory turnover ratio across companies in the telecommunications industry is 7.17x. Based on this…
Asset management ratios are used to measure how effectively a firm manages its assets, by relating the amount a firm has invested in a particular type of asset (or group of assets) to the amount of revenues the asset is generating. Examples of asset management ratios include the average collection period (also called the days sales outstanding ratio), the inventory turnover ratio, the fixed asset turnover ratio, and the total asset turnover ratio.
Consider the following case:
Walker Telecommunications has a quick ratio of 2.00x, $35,550 in cash, $19,750 in accounts receivable, some inventory, total current assets of $79,000, and total current liabilities of $27,650. The company reported annual sales of $200,000 in the most recent annual report.
Over the past year, how often did Walker Telecommunications sell and replace its inventory?
8.01x
8.44x
9.28x
2.86x
The inventory turnover ratio across companies in the telecommunications industry is…
Asset management ratios are used to measure how effectively a firm manages its assets, by relating the amount a firm has invested in a particular type of asset (or group of assets) to the amount of revenues the asset is generating. Examples of asset management ratios include the average collection period (also called the days sales outstanding ratio), the inventory turnover ratio, the fixed asset turnover ratio, and the total asset turnover ratio.
Consider the following case:
Walker Telecommunications has a quick ratio of 2.00x, $35,550 in cash, $19,750 in accounts receivable, some inventory, total current assets of $79,000, and total current liabilities of $27,650. The company reported annual sales of $200,000 in the most recent annual report. Additionally, the company’s cost of goods sold is 75% of sales.
Over the past year, how often did Walker Telecommunications sell and replace its inventory?
8.01x
2.86x
6.33x
6.96x
The inventory turnover…
Chapter 9 Solutions
Financial And Managerial Accounting
Ch. 9 - ONeil Office Supplies has a fleet of automobiles...Ch. 9 - Prob. 2DQCh. 9 - Prob. 3DQCh. 9 - Prob. 4DQCh. 9 - Prob. 5DQCh. 9 - Keyser Company purchased a machine that has a...Ch. 9 - Prob. 7DQCh. 9 - A. Under what conditions is the use of an...Ch. 9 - Prob. 9DQCh. 9 - Prob. 10DQ
Ch. 9 - Straight-line depreciation A building acquired at...Ch. 9 - Units-of-activity depreciation A truck acquired at...Ch. 9 - Double-declining-balance depreciation A building...Ch. 9 - Revision of depreciation Equipment with a cost of...Ch. 9 - Capital and revenue expenditures On February 14,...Ch. 9 - Sale of equipment Equipment was acquired at the...Ch. 9 - Prob. 7BECh. 9 - Prob. 8BECh. 9 - Fixed asset turnover ratio Select financial...Ch. 9 - Costs of acquiring fixed assets Melinda Stoffers...Ch. 9 - Prob. 2ECh. 9 - Prob. 3ECh. 9 - Nature of depreciation Tri-City Ironworks Co....Ch. 9 - Straight-line depreciation rates Convert each of...Ch. 9 - Straight-line depreciation A refrigerator used by...Ch. 9 - Depreciation by units-of-activity method A...Ch. 9 - Depreciation by units-of-activity method Prior to...Ch. 9 - Depreciation by two methods A Kubota tractor...Ch. 9 - Depreciation by two methods A storage tank...Ch. 9 - Partial-year depreciation Equipment acquired at a...Ch. 9 - Revision of depreciation A building with a cost of...Ch. 9 - Prob. 13ECh. 9 - Prob. 14ECh. 9 - Prob. 15ECh. 9 - Capital expenditure and depreciation Willow Creek...Ch. 9 - Entries for sale of fixed asset Equipment acquired...Ch. 9 - Disposal of fixed asset Equipment acquired on...Ch. 9 - Prob. 19ECh. 9 - Kleen Company acquired patent rights on January 10...Ch. 9 - Prob. 21ECh. 9 - Prob. 22ECh. 9 - Asset traded for similar asset A printing press...Ch. 9 - Prob. 24ECh. 9 - Prob. 25ECh. 9 - Prob. 26ECh. 9 - Prob. 1PACh. 9 - Comparing three depreciation methods Dexter...Ch. 9 - Depreciation by three methods; partial years...Ch. 9 - Depreciation by two methods; sale of fixed asset...Ch. 9 - Transactions for fixed assets, including sale The...Ch. 9 - Prob. 6PACh. 9 - Prob. 1PBCh. 9 - Comparing three depreciation methods Waylander...Ch. 9 - Depreciation by three methods; partial years...Ch. 9 - Depreciation by two methods; sale of fixed asset...Ch. 9 - Transactions for fixed assets, including sale The...Ch. 9 - Prob. 6PBCh. 9 - Compare Amazon.com to Netflix Amazon.com, Inc....Ch. 9 - Prob. 2MADCh. 9 - Prob. 3MADCh. 9 - Compare Fed Ex and UPS FedEx Corporation (FDX) and...Ch. 9 - Prob. 5MADCh. 9 - Revising depreciation estimates Hard Bodies Co. is...Ch. 9 - Communication Godwin Co. owns three delivery...Ch. 9 - Prob. 4TIF
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- Compare Fed Ex and UPS FedEx Corporation (FDX) and United Parcel Service, Inc. (UPS) 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: 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.arrow_forwardFedEx 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: 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.arrow_forwardCompare Dollar Tree and Dollar General The asset turnover ratios for two recent years for Dollar Tree, Inc. (DLTR) are shown in the Analysis for Decision Making section of this chapter. Using your results from MAD 5-2, compare and interpret the asset turnover ratios for Dollar Tree and Dollar General (DG).arrow_forward
- Analyze Home Depot The Home Depot (HD) reported the following data (in millions) in its recent financial statements: a. Determine the asset turnover ratio for Home Depot for Year 2 and Year 1. Round to two decimal places. b. What conclusions can be drawn from these ratios concerning the change in the ability of Home Depot to effectively use its assets to generate sales?arrow_forwardAsset management ratios are used to measure how effectively a firm manages its assets, by relating the amount a firm has invested in a particular type of asset (or group of assets) to the amount of revenues the asset is generating. Examples of asset management ratios include the average collection period (also called the days sales outstanding ratio), the inventory turnover ratio, the fixed asset turnover ratio, and the total asset turnover ratio. Consider the following case: Walker Telecommunications has a quick ratio of 2.00x, $35,550 in cash, $19,750 in accounts receivable, some inventory, total current assets of $79,000, and total current liabilities of $27,650. The company reported annual sales of $200,000 in the most recent annual report. Over the past year, how often did Walker Telecommunications sell and replace its inventory? A---8.01x B---2.86x C---9.28x D---8.44x The inventory turnover ratio across companies in the telecommunications industry is 9.284x. Based on this…arrow_forwardThe following information was reported by Amuse Yourself Parks (AYP): Net fixed assets (beginning of year) Net Fixed assets (end of year) Net sales for the year Net income for the year Required: Compute the company's fixed asset turnover ratio for the year. Numerator Denominator Fixed Asset Turnover Ratio 11 $ 8,490,000 8,290,000 4,111,100 1,930,000 "1arrow_forward
- refer to the photo below. Please provide a complete and correct solution.arrow_forwardWhere would you find the financial statements for Costco? https://motley.com https://wallstreet.com https://investor.costco.com https://sec.gov Endotherm Company produced revenue of $120,000. Beginning Assets for the period were $200,000 and Ending Assets were $250,000. What is the Total Asset Turnover Ratio for this period? .53 1.87 .48 .26 What is the Total Asset Turnover Ratio for a company with $120,000 in annual sales, beginning Assets of $250,000 and ending Assets of $200,000? .48 1.34 .26 .53 The efficiency ratio that shows how efficiently a company uses its cash to generate revenue is: Accounts Receivable Turnover Ratio. Total Asset Receivable Turnover Ratio. Cash Turnover Ratio. Inventory Turnover Ratio. please answer all questions. explainte answwer provide me with correct optionarrow_forwardNeed Answer pleasearrow_forward
- Referring to the following data of the Omani Company, that extracted from the balance sheet at 31122019. answer the following questions: (Note; Write all Equations regarding the questions) 1. The company manager targets to reduce the current ratio in the year (2020) by 33% from the previous year (2019), this requiring to downsize the amount of the total current asset. To what level can the manager reduce the total current asset to achieve this target at (2020)? (Suppose the other things are fixed) 2. The manager put a plan to reduce the selling period in the (2020) by (16.7%) from the previous year (2019). Calculate the new inventory turmover. (Suppose the other things are fixed) Data of 2019 Total Asset Turmover 2 Times Net Fixed Asset 400 (Thousand OMR) 400 (Thousand OMR) 2000 (Thousand OMR) Total Liabilities Sales Quick Ratio 1.5 Times Accounts Receivable 150 (Thousand OMR) 200 (Thousand OMR) Long-term Liabilitiesarrow_forwardSuppose you were a financial analyst trying to compare the performance of two companies. Company A uses the double-declining- balance depreciation method. Company B uses the straight-line method. You have the following information taken from the 12/31/2021 year-end financial statements for Company B: Income Statement Depreciation expense Balance Sheet Assets: Plant and equipment, at cost Less: Accumulated depreciation Net You also determine that all of the assets constituting the plant and equipment of Company B were acquired at the same time, and that all of the $260,000 represents depreciable assets. Also, all of the depreciable assets have the same useful life and residual values are zero. Required: 1. In order to compare performance with Company A, estimate what B's depreciation expense would have been for 2021 if the double- declining-balance depreciation method had been used by Company B since acquisition of the depreciable assets. 2. If Company B decided to switch depreciation…arrow_forwardWhich formulas are entered in cell C12 to return the value for the asset turnover ratio from existing ratios?arrow_forward
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