__________ best explains a ratio of (sales/average net fixed assets)that exceeds the industry average.
A) The firm expanded plant and equipment in the past few years
B) The firm makes less efficient use of assets than competing firms
C) The firm has a substantial amount of old plant and equipment.
D) The firm uses straight-line depreciation
E) None of these

Question

Quizplus · Accepted Answer

A high ratio of sales to average net fixed assets suggests that the firm is generating more sales per unit of fixed assets compared to the industry. This can occur if the firm has older, fully depreciated assets that are still in use, leading to a lower net fixed asset base.

__________ Best Explains a Ratio of (Sales/average Net Fixed Assets)that