Corporate Financial Accounting
14th Edition
ISBN: 9781305653535
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 9, Problem 9.2ADM
(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:
To Determine: Company V’s fixed asset Turnover Ratio
(B)
To determine
To interpret: the ratio with respect to the industry average.
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Fixed asset turnover ratio
Verizon Communications Inc. is a major telecommunications companyin the United States. Two recent balance sheets for Verzion disclosedthe following information regarding fixed assets:
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Comcast, Google, and Walmart: Fixed asset turnover ratio
The following table shows the sales and average book value of fixed assets for three different companies from three different industries for a recent year:
Average Book
Sales (in Value of Fixed Assets
Company (Industry)
millions) (in millions)
Comcast Corporation (communications)
$64,657
$28,536
Google Inc. (Internet)
59,825
14,189
Walmart Stores, Inc. (retail)
474,259
117,294
a. For each company, determine the fixed asset turnover ratio. (Round to one decimal place.)
Comcast:
Google:
Walmart:
b. Which of these statements are correct?
Chapter 9 Solutions
Corporate Financial Accounting
Ch. 9 - ONeil Office Supplies has a fleet of automobiles...Ch. 9 - Prob. 2DQCh. 9 - Prob. 3DQCh. 9 - Distinguish between the accounting for capital...Ch. 9 - Immediately after a used truck is acquired, a new...Ch. 9 - Keyser Company purchased a machine that has a...Ch. 9 - Is it necessary for a business to use the same...Ch. 9 - A. Under what conditions is the use of an...Ch. 9 - For some of the fixed assets of a business, the...Ch. 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. 9.7BECh. 9 - Prob. 9.8BECh. 9 - Costs of acquiring fixed assets Melinda Staffers...Ch. 9 - Prob. 9.2EXCh. 9 - Prob. 9.3EXCh. 9 - Prob. 9.4EXCh. 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 - Prob. 9.12EXCh. 9 - Capital and revenue expenditures Warner Freight...Ch. 9 - Prob. 9.14EXCh. 9 - Capital and revenue expenditures Quality Move...Ch. 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. 9.19EXCh. 9 - Amortization entries Kleen Company acquired patent...Ch. 9 - Prob. 9.21EXCh. 9 - Balance sheet presentation List the errors you...Ch. 9 - Asset traded for similar asset A printing press...Ch. 9 - Prob. 9.24EXCh. 9 - Entries for trade of fixed asset On July 1, Twin...Ch. 9 - Entries for trade of fixed asset On October 1,...Ch. 9 - Prob. 9.1APRCh. 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 - Prob. 9.5APRCh. 9 - Amortization and depletion entries Data related to...Ch. 9 - Allocating payments and receipts to fixed asset...Ch. 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 - Amortization and depletion entries Data related to...Ch. 9 - Continuing Company AnalysisAmazon: Fixed asset...Ch. 9 - Prob. 9.2ADMCh. 9 - Prob. 9.3ADMCh. 9 - Comcast, Google, and Walmart: Fixed asset turnover...Ch. 9 - Prob. 9.1TIFCh. 9 - Communication Godwin Co. owns three delivery...
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- 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: Beginning of Year (in millions) End of Year (in millions) Property, plant, and equipment Less accumulated depreciation Property, plant, and equipment (net) $220,163 $230,508 140,561 136,622 $ 83,541 $ 89,947 Verizon's revenue for the year was $131,620 million. Assume that 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. Interpret this ratio with respect to the industry average. b.arrow_forwardAsset turnover United Continental Holdings, Inc., (UAL), operates passenger service throughout the world. The following data (in millions) were adapted from a recent financial statement of United. Sales (revenue) $38,901 Average property, plant, and equipment 17,219 Average intangible assets 8,883 1. Compute the asset turnover. Round your answer to two decimal places.fill in the blank 1 2. If Delta, has a recent asset turnover of 1.11, United Continental Holdings, Inc. is generating __________ more sales per average dollar of invested long-term operating assets than Delta. (Options: $1.49, $1.73. $1,995, $0.38)arrow_forwardSelect financial statement data for two recent years for Davenport Company are as follows: Line Item Description 20Y5 20Y4 Sales $2,011,500 $1,088,000 Fixed assets: Beginning of year 720,000 640,000 End of year 770,000 720,000 a. Determine the fixed asset turnover ratio for 20Y4 and 20Y5. Round your answers to one decimal place. Line Item Description 20Y5 20Y4 Fixed Asset Turnover Ratio fill in the blank 1 of 2 fill in the blank 2 of 2arrow_forward
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