Knowledge Check 01 The balance sheets of Davidson Corporation reported net fixed assets $620,000 at the end of Year 1 and $340,000 at the end of Year 2. Net sales for Year 2 totaled $1,440,000. What is the fixed-asset turnover ratio for Year 2? (Round your answer to 1 decimal number.)
Calculate fixed asset turnover ratio for year 2
Fixed asset turnover ratio = net sales/average net fixed assets
Average net fixed assets= net fixed assets year 1 + net fixed assets year 2/2
Therefore
Average fixed assets =$620000+$340000/2
= $960000/2
= $480000
Fixed assets turnover ratio = $1440000/$480000
= 3
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