Newport Company has sales of $2,025,000 for the current year.The book value of its fixed assets at the beginning of the year was $550,000 and at the end of the year was $800,000.The fixed asset turnover ratio for Newport is
A)3.0
B)3.6
C)2.5
D)3.7

Question

Quizplus · Accepted Answer

The fixed asset turnover ratio is calculated as Sales divided by the average book value of fixed assets. The average book value is ($550,000 + $800,000) / 2 = $675,000. Therefore, the ratio is $2,025,000 / $675,000 = 3.0.

Newport Company Has Sales of $2,025,000 for the Current Year