Financial statement data for the year ending December 31 for Navajo Company follow: Sales $2,550,000 Net income 1,258,000 Fixed assets (net): Beginning of year 800,000 End of year 985,000 The fixed asset turnover ratio for Navajo Company on December 31 would be 2.9. 2.6. 1.4. None of these choices are correct.

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abiolataiwo2015 abiolataiwo2015 · Answer 1 · 2020-08-05T02:53:52+02:00

Answer:

Fixed Asset Turnover Ratio=2.9 Times

Explanation:

Calculation for the fixed asset turnover ratio for Navajo Company on December 31

The first step is to find the Average fixed asset

Using this formula

Average fixed assets=Beginning of year fixed assets + End of year Fixed assets/2

Let plug in the formula

Average Fixed assets =800,000+985,000/2

Average Fixed assets =$1,785,000/2

Average Fixed assets=$892,500

The next step is to calculate for the Fixed asset turnover ratio

Using this formula

Fixed asset turnover ratio=Sales/Average

Let plug in the formula

Fixed Asset Turnover Ratio=$2,550,000/$892,500

Fixed Asset Turnover Ratio=2.9 Times

Therefore fixed asset turnover ratio for Navajo Company on December 31 will be 2.9 Times