Puffin Turnovers,Inc.'s fixed asset turnover was 0.9 while Muffin Tops,Inc.'s fixed asset turnover was 0.6.Which of the following statements about Puffin compared with Muffin is correct?
A)Puffin generated more sales per dollar of fixed assets.
B)Puffin has greater depreciation expense.
C)Puffin has more fixed assets.
D)Puffin has greater sales.

Question

Quizplus · Accepted Answer

The fixed asset turnover ratio indicates how much revenue the company generates for each dollar invested in fixed assets,such as store buildings and the property they sit on.Since its fixed asset turnover ratio is higher,Puffin Turnovers generated more sales per dollar of fixed assets than Muffin Tops.