Which of the following statements regarding the fixed asset turnover ratio is incorrect?

A) The numerator is net operating income.
B) The denominator is average net fixed assets.
C) The ratio is used to assess a company's effectiveness in generating sales from its fixed assets.
D) The ratio increases when a company sells a factory building for a gain.

Fixed Asset Turnover Ratio

A performance metric that evaluates how efficiently a company is using its fixed assets to generate sales.

Net Operating Income

The profit realized from a business's operations after subtracting operating expenses from revenue.

Denominator

The bottom number in a fraction which indicates how many equal parts the whole is divided into.