A firm with a total asset turnover that is lower than industry standard but with a current ratio which meets industry standard must have excessive
A) fixed assets.
B) inventory.
C) accounts receivable.
D) debt.

Question

Quizplus · Accepted Answer

A lower total asset turnover compared to the industry standard suggests that the firm is not using its assets as efficiently as its peers to generate sales. If the current ratio is at the industry standard, it indicates that current assets and liabilities are balanced. Therefore, the inefficiency is likely due to excessive fixed assets, which do not affect the current ratio but do impact total asset turnover.

A Firm with a Total Asset Turnover That Is Lower