Question

The following is a list of account titles and amounts (in millions) reported at December 27, 2015, by Hashey, Inc. a leading manufacturer of games, toys, and interactive entertainment software for children and families: Accounts Receivable $1,094 Equipment 474 Accumulated Amortization Goodwill 729 579 Accumulated Depreciation Inventories 484 334 Allowance for Doubtful Accounts 41 Land 10 Buildings Cash and Cash Equivalents Licensing Rights 224 1,871 339 664 Prepaid Rent Required: 1. Prepare the asset section of a classified balance sheet for Hashey, Inc. 2. Using Hasbro's 2015 Net Sales Revenue of $4,630 (million), its Net Fixed Assets of $214 (million) at December 28, 2014, and its Net Fixed Assets computed at December 27, 2015, calculate the fixed asset turnover ratio for 2015.

Answer 1

1) The asset section of classified balance sheet for Hashey, Inc. is shown as follows:-

HASHEY, INC.
Balance Sheet (Partial)
December 27, 2015
(in Millions $)
Assets
Current Assets:
Cash and Cash Equivalents		664
Accounts Receivable	1,094
Allowance for Doubtful Accounts	(41)	1,053
Inventories		334
Prepaid Rent		339
Total Current Assets		2,390
Fixed Assets:
Property, Plant and Equipment
Land		10
Buildings		224
Equipment		474
Property, Plant and Equipment (at cost)		708
Accumulated Depreciation		(484)
Total Property, Plant and Equipment (net) (B)		224
Other Assets:
Goodwill		579
Licensing Rights		1,871
Accumulated Amortization		(729)
Total Other Assets (net) (C)		1,721
Total Assets (A+B+C)		4,335

Therefore total assets is $4,335 millions as on Dec 27, 2015.

2A) Fixed Assets Turnover Ratio = Sales Revenue/Average Fixed Assets

Average Fixed Assets = (Net fixed assets on Dec 28, 2014+Net fixed assets on Dec 27, 2015)/2

= ($214+$224) millions/2 = $219 millions

Fixed Assets Turnover Ratio = $4,630 millions/$219 millions = 21.14

Therefore fixed asset turnover ratio is 21.14.

2B) The company has generated more revenue as fixed asset turnover ratio of 2015 (i.e. 21.14) is more than the ratio of 2014 (i.e. 20.43).