Question

Suppose during 2022 that Federal Express reported the following information (in millions): net sales of $34,450 and net income of $89. Its balance sheet also showed total assets at the beginning of the year of $24,590 and total assets at the end of the year of $23,300. Calculate the asset turnover and return on assets. (Round asset turnover to 2 decimal places, e.g. 6.25 and return on assets to 1 decimal place, e.g. 17.5%.)

Answer 1

Answer:

1.44 times and 0.37%

Explanation:

The computation of the asset turnover is shown below:

Total asset turnover = (Sales ÷  Average of Total assets)

where,

Sales = $34,450

Average of total assets is

= ($24,590 + $23,300) ÷ 2

= $23,945

So, the total asset turnover is

= ($34,450) ÷ ($23,945)

= 1.44 times

The return on assets

= Net income ÷ average of total assets

= $89 ÷ $23,945

= 0.37%