It is appropriate to use the fixed assets turnover ratio to appraise firms' effectiveness in managing their fixed assets if and only if all of the firms being compared have the same proportion of fixed assets to total assets.

Question

Quizplus · Accepted Answer

The FA turnover is Sales/FA,and it gives an indication of how effectively the firm utilizes its FA.The proportion of FA to TA is not relevant to this usage.

It Is Appropriate to Use the Fixed Assets Turnover Ratio