Which of the following statements about the capital acquisitions ratio is correct?
A)A high ratio indicates less need for outside financing of property, plant and equipment.
B)The ratio is computed by dividing cash flow from operations by the average net property, plant and equipment.
C)A low ratio may indicate a failure to update property, plant and equipment which can limit a company's ability to compete in the future.
D)The ratio is comparable across industries.

Question

Quizplus · Accepted Answer

The capital acquisitions ratio is calculated by dividing cash flow from operating activities by cash paid for property, plant, and equipment. A high ratio implies the ability to finance fixed asset acquisitions from operations cash flows.

Which of the Following Statements About the Capital Acquisitions Ratio