Pier 1 Imports, Inc., is a leading retailer of domestic merchandise and home furnishings. The company’s 2017 fixed-asset turnover ratio, using the average book value of property, plant, and equipment (PP&E) as the denominator, was approximately 9.16. Additional information taken from the company’s 2017 annual report is as follows: 

                                                                                                    ($ in thousands) 

Book value of PP&E—beginning of 2017........................................................$207,633 

Net purchases of PP&E during 2017*....................................................................44,347 

Depreciation of PP&E for 2017.................................................................................60,504

Required: 

1. How is the fixed-asset turnover ratio computed? How would you interpret Pier 1’s ratio of 9.16? 

2. Use the data to determine Pier 1’s net sales for 2017. 

3. Obtain annual reports from three corporations in the same primary industry as Pier 1 Imports, Inc. (Bed, Bath & Beyond and Williams-Sonoma, Inc., are two well-known companies in the same industry) and compare the management of each company’s investment in property, plant, and equipment.