Chapter 9, Problem 9.23EX

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:

$\text{Fixed}\text{Asset turnover }=\frac{\text{Sales}}{\text{Average total}\text{fixed assets}}$

the fixed asset Turnover Ratio for year 2.

b.

To determine

To interpret: Company V’s fixed asset turnover ratio.