Pier 1 Imports, Inc., is a leading retailer of domestic merchandise and home furnishings. The company's 2016 fixed-asset turnover ratio, using the average book value of property, plant, and equipment (PP&E) as the denominator, was approximately 8.97. Additional information taken from the company's 2016 annual report is as follows:
__________________________________________($ in thousands)
Book value of PP&E-beginning of 2016 ................ $214,048
Purchases of PP&E during 2016 ............................ 51,813
Depreciation of PP&E for 2016 ............................. 55,830
Equipment having a book value of $2,398 thousand was sold during 2016.
Required:
1. How is the fixed-asset turnover ratio computed? How would you interpret Pier 1's ratio of 8.97?
2. Use the data to determine Pier 1's net sales for 2016.