Which one of the following capital intensity ratios indicates the largest need for fixed assets per dollar of sales?
A)0.70
B)0.86
C)1.00
D)1.06
E)1.15

Question

Quizplus · Accepted Answer

Capital intensity ratio measures the amount of investment in fixed assets required to achieve a certain level of sales. The ratio is calculated by dividing total assets by sales.

Out of the given options, the highest ratio is 1.15 (E), which indicates that for every $1 of sales, $1.15 worth of fixed assets are required. Thus, option E indicates the largest need for fixed assets per dollar of sales.

Which One of the Following Capital Intensity Ratios Indicates the Largest