A company with relatively small amounts of long-lived operational assets but which has a high level of inventory would most likely have a lower total asset turnover but a higher fixed asset turnover ratio.

Question

Quizplus · Accepted Answer

A company with high inventory levels and low long-lived assets will have a higher fixed asset turnover (sales divided by fixed assets) due to fewer fixed assets, but a lower total asset turnover (sales divided by total assets) because total assets include high inventory.

A Company with Relatively Small Amounts of Long-Lived Operational Assets