The Company's Fixed Asset Turnover Ratio for 2018

The fixed asset turnover ratio is an important financial metric that indicates how efficiently a company is using its fixed assets to generate sales revenue. In this case, the company had net sales revenue of $4.2 million in 2018.

To calculate the fixed asset turnover ratio, we need to determine the average fixed assets for the year. This is done by adding the opening fixed assets (property, plant, and equipment) with the closing fixed assets and then dividing by 2.

In this scenario, the opening fixed assets were $2.6 million, and the closing fixed assets were $3.1 million. Therefore, the average fixed assets for the year were calculated as follows: Average Fixed Assets = (Opening Fixed Assets + Closing Fixed Assets) / 2 Average Fixed Assets = ($2.6 million + $3.1 million) / 2 Average Fixed Assets = $2.85 million

Finally, we can plug these values into the formula to calculate the fixed asset turnover ratio: Fixed Asset Turnover Ratio = $4.2 million / $2.85 million Fixed Asset Turnover Ratio = 1.47

It is important to note that only tangible fixed assets such as property, plant, and equipment are considered when calculating the fixed asset turnover ratio. Intangible assets like goodwill and licensing agreements are not included in this calculation.