Fixed Asset Turnover Ratio

Amazon.com, Inc. is the worlds leading Internet retailer of merchandise and media. Amazon also designs and sells electronic products, such as e-readers. Netflix, Inc. is the worlds 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:

	Amazon	Netflix
Sales		$232,887			$15,794
Average book value of fixed assets		55,332			369

a. Compute the fixed asset turnover ratio for each company. Round to one decimal place.

	Fixed Asset Turnover Ratio
Amazon
Netflix

b. Which company is more efficient in generating sales from fixed assets?

Amazon or Netflix

c. Based on your calculations above which of the following is true?

1. The difference in their fixed asset turnover ratios because Netflix does not require significant investment in fixed asset as compared to Amazon. This is primarily due to the difference in their core business.
2. The difference in their fixed asset turnover 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.
3. The difference in their fixed asset turnover ratios because Netflix is managing its fixed assets more efficiently than Amazon. This is primarily due to the difference in their management.
4. The difference in their fixed asset turnover ratios because Amazon is managing its fixed assets more efficiently than Netflix. This is primarily due to the difference in their management.