Question

Huebert Corporation and Winslow Corporation reported the following information: ($ in millions) Huebert Winslow 2018 2017 2018 2017 Property, plant, and equipment (net) $ 490 $ 510 $ 990 $ 980 Net sales—2018 $ 4,290 $ 7,380 Calculate each companies fixes-asset turnover ratio and determine which company utilizes its fixed assets most efficiently to generate sales.

Answer 1

Average fixed assets ($ In million)
		Huebert	Winslow
A	Fixed assets in 2017	$ 490.00	$ 980.00
B	Fixed assets in 2018	$   510.00	$ 990.00
C=((A+B)/2)	Average fixed assets	$   500.00	$ 985.00

	Fixed asset Turnover
	Numerator	/	denominator	=	Fixed asset Turnover
	Net sales	/	Average Fixed assets	=	Fixed asset Turnover
Huebert	$      4,290.00	/	$          500.00	=	8.58	times
Winslow	$      7,380.00	/	$          985.00	=	7.49	times

Huebert utilizes its Fixed assets most efficiently as it has higher Fixed asset turnover ratio than Winslow.