Which of the following defines the capital intensity ratio?
A) sales divided by total assets, i.e., the total assets turnover ratio.
B) the percentage of liabilities that increase spontaneously as a percentage of sales.
C) the ratio of current assets to sales.
D) the amount of assets required per dollar of sales, or A*/S0.

Question

Quizplus · Accepted Answer

The capital intensity ratio is defined as the amount of assets required per dollar of sales. Therefore, choice D, which describes this ratio, is the correct answer. Choice A describes the total assets turnover ratio, choice B describes the spontaneous liability ratio, and choice C describes the current assets turnover ratio, none of which are the same as the capital intensity ratio.

Which of the Following Defines the Capital Intensity Ratio