We can use the fixed assets turnover ratio to legitimately compare firms in different industries as long as all the firms being compared are using the same proportion of fixed assets to total assets.

Question

Quizplus · Accepted Answer

The fixed assets turnover ratio is calculated by dividing sales by fixed assets. However, different industries may have different proportions of fixed assets to total assets, which makes it difficult to use this ratio to compare firms in different industries. Therefore, it is not necessary for all the firms being compared to use the same proportion of fixed assets to total assets.

We Can Use the Fixed Assets Turnover Ratio to Legitimately