__________ best explains a ratio of sales/average net fixed assets that exceeds the industry average.
A) The firm expanded plant and equipment in the past few years
B) The firm makes less efficient use of assets than competing firms
C) The firm has a substantial amount of old plant and equipment
D) The firm uses straight-line depreciation

Question

Quizplus · Accepted Answer

A ratio of sales to average net fixed assets that exceeds the industry average suggests that the firm is generating more sales per dollar of net fixed assets than its competitors. This can be due to having a substantial amount of old plant and equipment, which would have been depreciated over time, lowering the book value of these assets and thus increasing the ratio.

__________ Best Explains a Ratio of Sales/average Net Fixed Assets