Question

Asset turnover
Three major segments of the transportation industry are motor carriers, such as Atlantic; railroads, such as Pacific; and transportation arrangement services, such as Mediterranean. Recent financial statement information for these three companies is shown as follows (in thousands of dollars):
Atlantic Pacific Mediterranean
Sales $4,017,825 $6,180,075 $922,564
Average total assets 892,850 1,373,350 485,560
a. Determine the asset turnover for all three companies. Round to one decimal place.
Atlantic
Pacific
Mediterranean
b. The ratio of sales to assets measures the number of sales dollars earned for each dollar of assets. The greater the number of sales dollars earned for every dollar of assets, the

efficient a firm is in using assets.

Answer 1

	Atlantic	Pacific	Mediterranean
Sales (A)	4017825	6180075	922564
Average total assets (B)	892850	1373350	485560
Asset turnover (A/B)	4.5	4.5	1.9

B,

True

The ratio of sales to assets measures a company's ability to generate revenues from its assets efficiently. The ratio is calculated by dividing a company's revenues by its total assets. For example, suppose a company has an asset turnover ratio of 5. Each dollar of the company's assets generates $5 of revenue.

answered by: anonymous