A firm with a total asset turnover that is lower than industry standard but with a current ratio that meets industry standard must have excessive ________.
A) fixed assets
B) inventory
C) accounts receivable
D) debt

Question

Quizplus · Accepted Answer

A firm with a lower total asset turnover compared to the industry standard indicates that it is not using its assets efficiently to generate sales. If the current ratio is at the industry standard, it suggests that current assets and liabilities are balanced. Therefore, the issue likely lies with excessive fixed assets, which do not contribute to current ratio but affect total asset turnover.

A Firm with a Total Asset Turnover That Is Lower