Assume that a particular firm has a total asset turnover ratio lower than the industry norm.In addition, this firm's current ratio and fixed asset turnover ratio also meet industry standards.Based on this information, we can conclude that this firm must have excessive [blank].
A)current liabilities
B)fixed assets
C)long-term debt
D)current assets

Question

Quizplus · Accepted Answer

The firm's total asset turnover is low, indicating it is not efficiently using its total assets to generate sales. Since its fixed asset turnover is normal, the inefficiency must be due to excessive current assets, which are part of total assets.

Assume That a Particular Firm Has a Total Asset Turnover