Asked by Kiasha Trammell on Jul 06, 2024
Verified
The higher the fixed asset turnover, the
A) less efficiently a company is using its fixed assets in generating sales
B) more efficiently a company is using its fixed assets in generating sales
C) more efficiently a company is using its current assets in generating sales
D) more efficiently a company is using its intangible assets in generating sales
Fixed Asset Turnover
A financial ratio that measures a company's efficiency in using its fixed assets to generate sales.
Generating Sales
The process of creating revenue for a company through selling goods or services.
Fixed Assets
Durable, physical assets utilized in running a business, which are not foreseen to be cashed in or used up in the near term.
- Absorb information on the operation and taxonomy of the Accumulated Depreciation account.
Verified Answer
AW
Austin WheelockJul 10, 2024
Final Answer :
B
Explanation :
Fixed asset turnover is calculated by dividing a company's net sales by its total fixed assets. A higher fixed asset turnover indicates that the company is generating more sales with the same amount of fixed assets or able to generate the same level of sales with fewer fixed assets, which means the company is using its fixed assets efficiently.
Learning Objectives
- Absorb information on the operation and taxonomy of the Accumulated Depreciation account.