Which of the following statements is incorrect?
A)Purchasing fixed assets through equity financing decreases total asset turnover.
B)Accruing an expense decreases earnings per share.
C)The return on equity ratio increases when treasury stock is purchased.
D)The purchase of fixed assets will cause the total asset turnover to increase.

Question

Quizplus · Accepted Answer

The purchase of fixed assets increases the total assets, which could decrease the total asset turnover if sales do not increase proportionately. Total asset turnover is calculated as sales divided by total assets, so increasing assets without a corresponding increase in sales lowers the ratio.

Which of the Following Statements Is Incorrect