Question

Asset turnover Southwest Airlines (LUV) operates passenger services throughout the United States. The following data (in millions) were adapted from a recent financial statement of Southwest. Sales (revenue) $18,605 Average property, plant, and equipment 13,841 Average intangible assets 970 1. Compute the asset turnover. Round your answer to two decimal places. 1.34 x 2. Assume United and Delta, has a recent asset turnover of 1.49 and 1.11 repectivly. Which of the following presents the order of most efficient company to least efficient company with respect to managing fixed assets to generate sales? Southwest, Delta, United X Foodback Check My Work 1. Divide sales by average long-term operating assets. 2. Asset turnover measures how efficiently a company uses its operating assets to generate sales. A higher asset turnover ratio indicates that the long-term operating assets of a company are effectively utilized in generating sales.

Answer 1

Ans:

1.Asset Turnover=Sales/Average Assets

=18605/14811

=1.256

=1.26(if rounded off two decimals)

Average assets=Average Property,Plant,Equipement +Average Intangible assets

2.United,Delta

Because united is having higher turnover ratio than delta so Managing the fixed assets to generate sales

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