The fixed asset turnover ratio is influenced by
A)the age of the assets employed
B)the depreciation method used by the firm
C)the firm's choice of a production technology
D)all of these

Question

Quizplus · Accepted Answer

The fixed asset turnover ratio is calculated by dividing net sales by average fixed assets. As such, this ratio is influenced by the age of the assets employed (A), as older assets may be less efficient and therefore generate less revenue. It is also influenced by the depreciation method used by the firm (B), as different methods can result in different book values for the assets and, therefore, different turnover ratios. Lastly, the firm's choice of a production technology (C) can also impact the efficiency of the assets and the resulting turnover ratio. Therefore, all of these factors can influence the fixed asset turnover ratio, making option D the best choice.

The Fixed Asset Turnover Ratio Is Influenced by