In a well-run business, creditors expect the total asset turnover ratio to ﬂuctuate due to seasonal upswings and downturns.

Question

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Creditors understand that businesses may have certain seasons where their sales and asset turnover are higher, and that this may cause fluctuations in the total asset turnover ratio. Therefore, it is expected and does not necessarily indicate poor performance.

In a Well-Run Business, Creditors Expect the Total Asset Turnover