Asked by Brian Henry on Jun 19, 2024
Verified
The fixed asset turnover ratio increases when net income increases.
Fixed Asset Turnover Ratio
A financial metric that measures how efficiently a company is using its fixed assets to generate sales.
- Understand the relationship between net income and various financial metrics.
Verified Answer
KC
Kajal ChampaneriJun 21, 2024
Final Answer :
False
Explanation :
The fixed asset turnover ratio is calculated by dividing net sales by average fixed assets. While an increase in net income could potentially lead to an increase in net sales, it is not necessarily directly correlated with an increase in average fixed assets. Therefore, the relationship between net income and fixed asset turnover ratio is not straightforward.
Learning Objectives
- Understand the relationship between net income and various financial metrics.
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