Which of the following statements is correct?
A)Selling inventory for cost does not affect the net profit margin ratio.
B)Accruing sales revenue doesn't affect the net profit margin ratio.
C)The asset turnover ratio increases when fixed assets are sold for a loss.
D)The net profit margin ratio decreases when common stock is issued.

Question

Quizplus · Accepted Answer

Selling fixed assets at a loss reduces average total assets, the asset turnover ratio denominator, the ratio therefore increases.

Which of the Following Statements Is Correct