In: Finance
A fixed asset turnover ratio of 0.72 means that:
A. |
For every $1 in net fixed assets, a firm can generate $0.72 in net income. |
|
B. |
For every $1 in net fixed assets, a firm can generate $0.72 in
sales. |
|
C. |
For every $1 in total assets, a firm can generate $0.72 in net income. |
|
D. |
For every $1 in net fixed assets, a firm can borrow $0.72. |
|
E. |
For every $1 in total assets, a firm can generate $0.72 in sales. |
A fixed asset turnover ratio of 0.72 means that:
"B. For every $1 in net fixed assets, a firm can generate $0.72 in sales."
Note:
1) Formula of Fixed asset turnover = Net Sales / Net Fixed assets
So, if the net sales is $0.72 and Net fixed assets is $1 then fixed asset turnover will be 0.72.
2) Net fixed assets = Tota assets - Accumulated Depreciation.