Asked by Shayan Patel on May 06, 2024

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__________ best explains a ratio of sales/average net fixed assets that exceeds the industry average.

A) The firm expanded plant and equipment in the past few years
B) The firm makes less efficient use of assets than competing firms
C) The firm has a substantial amount of old plant and equipment
D) The firm uses straight-line depreciation

Sales

The transactions of selling goods or services within a specified period, often measured to assess company performance.

Average Net Fixed Assets

The average value of a company's fixed assets, like property, plant, and equipment, net of depreciation, over a specified period.

Industry Average

A metric that represents the average performance or benchmark for a particular industry or sector.

  • Understand the impact of inventory management on a firm's financial performance.
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RA
Rocio AdyleneMay 12, 2024
Final Answer :
C
Explanation :
A ratio of sales to average net fixed assets that exceeds the industry average suggests that the firm is generating more sales per dollar of net fixed assets than its competitors. This can be due to having a substantial amount of old plant and equipment, which would have been depreciated over time, lowering the book value of these assets and thus increasing the ratio.