If company A showed a capital assets turnover of 4.8 times and the industry average is 5.1 times, how does the company compare to the industry average?
A) A turnover of 4.8 means that each dollar of revenue requires an investment of $4.80 in capital assets.
B) To increase the capital assets turnover ratio, the company should increase capital assets while keeping revenue steady.
C) Investors prefer lower capital asset turnovers.
D) The company's turnover is worse than the industry average.

Question

Quizplus · Accepted Answer

The capital assets turnover ratio measures how efficiently a company uses its assets to generate sales. A ratio of 4.8 compared to the industry average of 5.1 means Company A is less efficient than the average, indicating its turnover is worse.

If Company a Showed a Capital Assets Turnover of 4