Fixed asset turnover ratio Amazon.com, Inc. is the world\'s leading Internet ret
ID: 2531421 • Letter: F
Question
Fixed asset turnover ratio Amazon.com, Inc. is the world's leading Internet retailer of merchandise and media. Amazon also designs and sells electronic products, such as e-readers, Netflix, Inc. is the world's leading Internet television network. Both companies compete in the digital media and streaming space. However, Netflix is more narrowly focused in the digital streaming business than is Amazon. Sales and average book value of fixed assets information [in millions) are provided for Amazon and Netflix for a recent year as follows: Sales Average book value of fixed assets a. Compute the fixed asset turnover ratio for each company. Round to one decimal place Amazon Netflix 107,006 $6,780 19,403162 Fixed Asset Turnover Ratio Amazon Netflix b. Which company is more efficient in generating sales from fixed assets? C. Based on your calaulations above which of the following is true? the followir The dfference in their fixed asset tunover ratios because Netfhlx does not require significant investment in fixed asset as compared to Amazon. This is primarily due to the dfference in their core business. 2. The difference in their fixed asset tumover ratios because Amazon does not require significant investment in fixed asset as compared to Netflix. This is primarily due to the difference in their core business. ·The difference in their fixed asset turnover ratios because Netix 1s managing its o ed assets more efficiently than Amazon. This primarily due to the difference in their management. 4. The difference in their fixed asset tumover ratios because Amazon is managing its fixed assets more efficiently than Netflx. This is primarily due to the difference in their management.Explanation / Answer
Answer (a)
Fixed Assets Turnover Ratio = Net Sales / Average Fixed Assets
Amazon = $ 107,006 / 19403
= 5.5 times
Netflix = $ 6,780 / 162
= 41.9 times
Answer (b)
The company which is more efficient in generating sales from fixed assets is Netflix
Answer (c)
Statement No. 1 and 3 are true.
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