A decrease in the fixed asset turnover ratio from 3.0 to 2.2 indicates a. an unfavorable change in the efficiency of using fixed assets to pay down debt. b. a favorable change in the efficiency of using fixed assets to generate sales. c. an unfavorable change in the efficiency of using fixed assets to generate sales. d. None of these choices are correct.

Question

Freddy

Business

21 March, 11:19

A decrease in the fixed asset turnover ratio from 3.0 to 2.2 indicates a. an unfavorable change in the efficiency of using fixed assets to pay down debt. b. a favorable change in the efficiency of using fixed assets to generate sales. c. an unfavorable change in the efficiency of using fixed assets to generate sales. d. None of these choices are correct.

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Landyn Liu · Answer 1

Answer:B. A favourable change in the efficiency of using fixed assets to generate sales

Explanation:

Assets turnover ratio measures the efficiency in which the company used his assets to generate sales. The higher the ratio more efficient the company is using assets to generate sales and vice versa however a higher ratio means a low profit margin and vice versa.