Which ratio is used to evaluate how a company is managing its property, plant and equipment?
A) Accounts receivable turnover
B) Inventory turnover
C) Fixed asset turnover
D) Net profit margin

Question

Quizplus · Accepted Answer

Fixed asset turnover is the ratio used to evaluate how efficiently a company is managing its property, plant, and equipment. This ratio measures how much revenue a company generates for each dollar invested in its fixed assets. A higher fixed asset turnover ratio indicates better management of these assets, as it means the company is using its assets to generate more revenue. Accounts receivable turnover, inventory turnover, and net profit margin are all different ratios used to evaluate other aspects of a company's financial performance.

Which Ratio Is Used to Evaluate How a Company Is