Progressive Company reported the following asset values in 2012 and 2013:

In addition, in 2013, Progressive had sales of $4,800,000; cost of goods sold for the year was $2,900,000.
As of the end of 2012, the fair value of Progressive's total assets was $3,000,000. Of the excess of fair value over book value, $100,000 resulted from the fact that Progressive uses LIFO for inventory valuation. As of the end of 2013, the fair value of Progressive's total assets was $3,800,000, and Progressive's LIFO reserve was $150,000.
Instructions:
1. Compute Progressive's fixed asset turnover ratio for 2013.
2. Using the fair value of fixed assets instead of their book values, recomputed Progressive's fixed asset turnover ratio for 2013. State any assumptions that you make.
3. Progressive's primary competitor is Steady State. Steady State's fixed asset turnover ratio for 2013, based on publicly available information, is 2.5. Is Progressive more or less efficient at using its fixed assets than Steady State? Explain your answer.

Transcribed Image Text:

2013 2012 串沅),00() 300,000 45,00() 220,000 600,000400,000 900,000800,000