Hospital N will report higher net income. Hospital N will have higher total-asse

Question

       Hospital N will report higher net income.
       Hospital N will have higher total-asset turnover.
       Hospital N will have higher fixed-asset turnover.
       Hospital N will have lower gross fixed assets.
       None of the above statements is correct

Suppose that two hospitals are identical in all ways except that Hospital N is relatively new while Hospital O is relatively old. Which of the following statements about a comparative financial statement analysis is most correct? (Hint: Think about the differences in the amount of net fixed assets [net plant and equipment] carried on the balance sheet and the amount of depreciation expense reported on the income statement.)

Explanation / Answer

Correct option:

Hospital N will have lower gross fixed assets.

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