A fixed asset turnover ratio of.72 means that:
A) For every $1 in total assets, a firm can generate $0.72 in net income.
B) For every $1 in net fixed assets, a firm can generate $0.72 in net income.
C) For every $1 in total assets, a firm can generate $0.72 in sales.
D) For every $1 in net fixed assets, a firm can generate $0.72 in sales.
E) For every $1 in net fixed assets, a firm can obtain $0.72 in debt.

Question

Quizplus · Accepted Answer

The fixed asset turnover ratio measures how efficiently a company uses its fixed assets to generate sales, indicating that for every $1 in net fixed assets, the company generates $0.72 in sales.

A Fixed Asset Turnover Ratio Of.72 Means That