Interpret Verizon’s fixed asset turnover ratio.

Ex 9-23  Fixed asset turnover ratio                                                                      ObJ. 7

Verizon Communications is a major telecommunications company in the United States. Two recent balance sheets for Verizon disclosed the following information regarding fixed assets:

 

 

Year 2 (in millions) Year 1 (in millions)

 

Plant, property, and equipment                                       $209,575                           $215,626

Less  accumulated depreciation                                        120,933                             127,192

$ 88,642                       $ 88,434

                                              

 

Verizon’s revenue for Year 2 was $115,846 million. Assume the fixed asset turnover for the telecommunications industry averages approximately    1.10.

a.     Determine Verizon’s fixed asset turnover ratio for Year 2. Round to two decimal places.

b.                              Interpret Verizon’s fixed asset turnover ratio.

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