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7 April, 14:57

Suppose during 2022 that Federal Express reported the following information (in millions) : net sales of $34,450 and net income of $89. Its balance sheet also showed total assets at the beginning of the year of $24,590 and total assets at the end of the year of $23,300. Calculate the asset turnover and return on assets. (Round asset turnover to 2 decimal places, e. g. 6.25 and return on assets to 1 decimal place, e. g. 17.5%.)

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  1. 7 April, 18:52
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    1.44 times and 0.37%

    Explanation:

    The computation of the asset turnover is shown below:

    Total asset turnover = (Sales : Average of Total assets)

    where,

    Sales = $34,450

    Average of total assets is

    = ($24,590 + $23,300) : 2

    = $23,945

    So, the total asset turnover is

    = ($34,450) : ($23,945)

    = 1.44 times

    The return on assets

    = Net income : average of total assets

    = $89 : $23,945

    = 0.37%
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