Which of the following statements is NOT true of the asset turnover ratio?
A) Asset turnover ratio measures the dollar amount of sales per dollar of assets that the firm has.
B) The fixed assets turnover ratio is less significant for equipment-intensive manufacturing industry firms than the total assets turnover ratio.
C) The higher the total asset turnover, the more efficiently management is using total assets.
D) The ratio is quite useful in identifying the inefficient use of current and long-term assets.

Question

Quizplus · Accepted Answer

This statement is not entirely true because the fixed assets turnover ratio is significant for equipment-intensive manufacturing industry firms. The ratio measures the dollar amount of sales generated by the firm's investment in property, plant, and equipment, and is therefore relevant for equipment-intensive manufacturing industry firms.

Which of the Following Statements Is NOT True of the Asset