Verizon Communications is a major telecommunications company in the United States.
Verizon’s balance sheet disclosed the following information regarding fixed assets:
|
Dec. 31, 2005 |
|
Dec. 31, 2004 |
|
(in millions) |
|
(in millions) |
|
Plant, property, and equipment |
$193,610 |
$185,522 |
|
Less accumulated depreciation |
118,305 |
111,398 |
|
|
$ 75,305 |
$ 74,124 |
Verizon’s revenue for 2005 was $75,112 million. The fixed asset turnover for the telecommunications industry averages 1.10.
a. Determine Verizon’s fixed asset turnover ratio. Round to two decimal places.
b. Interpret Verizon’s fixed asset turnover ratio.