A fixed asset turnover ratio of 1.65 for a company indicates that:
A)a company is generating $1.65 of sales per average dollar of fixed asset.
B)a company is generating $1.65 of net income per average dollar of fixed asset.
C)a company has $1.65 of long term debt for every dollar of fixed asset.
D)a company has $1.65 of current assets for every dollar of fixed asset.

Question

Quizplus · Accepted Answer

A fixed asset turnover ratio shows how efficiently a company is using its fixed assets to generate sales. A ratio of 1.65 means that the company is generating $1.65 of sales per average dollar of fixed asset. This indicates that the company is using its fixed assets efficiently to generate revenues.

A Fixed Asset Turnover Ratio of 1