The following table shows the revenue and average net fixed

The following table shows the revenue and average net fixed assets (in millions) for a recent fiscal year for Eastern Company and Western, Inc: Average Net Revenue Fixed Assets Eastern Company Western, Inc. a. Compute the fixed asset turnover for each company. Round to two decimal places Eastern Company Western, Inc. b. Which company uses its fixed assets more efficiently? 24,452 2,191 8,949 679 A higher ratio means that there is

Solution

a. Fixed asset turnover = Revenue / Average net fixed assets

Easter company:

Fixed asset turnover = $24,452 / $2,191 = 11.16

Western, Inc.:

Fixed asset turnover = $8,949 / $679 = 13.18

b. Western, Inc.