Question

In: Finance

A firm is capital intense in its operations, like a railroad.This firm will most likely...

A firm is capital intense in its operations, like a railroad. This firm will most likely have a:


a.

low Profit Margin on Sales


b.

low Total Asset Turnover


c.

low Liquidity


d.

low Stock Price

Solutions

Expert Solution

Correct answer: b. low Total Asset Turnover

Capital intensive ratio is inverse of Total Assets Turnover ratio. Thus, when a firm is capital intense then it would have low total assets turnover.

jeff jeffy answered 2 years ago
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