A decline in the ratio net sales/average property, plant and equipment over time could mean:

Question

Quizplus · Accepted Answer

A decline in the ratio of net sales/average property, plant, and equipment could mean that there is an over-investment in plant and equipment. This means that the company may have too much capital invested in assets that are not generating sufficient revenue or sales. As a result, the ratio of net sales to average property, plant, and equipment will decline over time, indicating a potential problem for the company.

A Decline in the Ratio Net Sales/average Property, Plant and Equipment