A firm has an asset turnover of 3 times and a net profit margin of 4%.In the next year its margin decreases to 2%.This is not necessarily bad if
A)asset turnover increases to at least 6 times
B)asset turnover decreases to 1.5 times
C)asset turnover doesn't change
D)gross margin increases enough to offset the decrease in net profit margin

Question

Quizplus · Accepted Answer

If the asset turnover increases to at least 6 times, it can compensate for the decrease in net profit margin, maintaining or even increasing overall profitability.

A Firm Has an Asset Turnover of 3 Times and a Net