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21 June, 12:10

The company has net sales revenue of $5.0 million during 2018. The company's records also included the following information: Assets 12/31/17 12/31/18 Property, plant and equipment $ 3.0 million $ 3.9 million Licensing agreements $ 1.2 million $ 1.1 million Goodwill $ 1.0 million $ 1.0 million Investments $ 1.1 million $ 1.2 million What is the company's fixed asset turnover ratio for 2018

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  1. 21 June, 13:19
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    1.45 times

    Explanation:

    The computation of company's fixed asset turnover ratio is shown below:-

    Average of Net Property, plant and equipment = ($3.0 million + $3.9 million) : 2

    = $6.9 million : 2

    = $3.45 million

    Fixed asset turnover ratio = Net Sales : Average of Net Property, plant and equipment

    = $5 million : $3.45 million

    = 1.45 times

    Therefore for computing the fixed assets turnover ratio we simply applied the above formula.
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