Pier 1 Imports, Inc., is a leading retailer of domestic merchandise and home furnishings. The company's 2014 fixed-asset turnover ratio, using the average book value of property, plant, and equipment (PP&E) as the denominator, was approximately 10.61. Additional information taken from the company's 2014 annual report is as follows:

($ in thousands)

Book value of PP&E-beginning of 2014 ...................$150,615

Purchases of PP&E during 2014 .................................. 80,306

Depreciation of PP&E for 2014 ................................... 38,873

Equipment having a book value of $8,696 thousand was sold during 2014.

Required:

1. How is the fixed-asset turnover ratio computed? How would you interpret Pier 1's ratio of 10.61?

2. Use the data to determine Pier 1's net sales for 2014.