Firm A Current assets Fixed assets Total assets 10 14 Current assets Fixed asset

Question

Firm A Current assets Fixed assets Total assets 10 14 Current assets Fixed assets Total assets Firm A Firm B: Total sales 12 Total sales 12 Gross Profit Gross Profit Above are portions of the balance sheet and income statement for two companies in 2008. Based upon this information, which of the following statements is most likely to be true? A Asset turnover ratios indicate that firm A is generating greater revenue per dollar of assets than firmB C) Both asset turnover ratios and fixed asset turnover ratios indicate that firm A is generating greater revenue per dollar of assets than firm B D) Fixed asset turnover ratios indicate that firm A is generating more sales for the assets it employs than firm B B) Fixed asset turnover ratios indicate that firm A is generating fewer sales for the assets it employs than firm EB

Explanation / Answer

Answer:

Option B) Fixed asset turnover ratios indicate that firm A is generating fewer sales for the assets it employs than firm B

Explanation:

Firm A - Sales 12 from fixed assets 10

Firm B - Sales 12 from fixed assets 7

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