Which Ratio Assesses How Efficiently a Firm Uses Its Fixed

question 13

Multiple Choice

Which ratio assesses how efficiently a firm uses its fixed assets?

• A) capital intensity ratio
• B) current ratio
• C) average collection period
• D) fixed asset turnover

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Definitions:

Face Value

The original cost of a financial instrument as stated on the certificate or document, not influenced by the market price.

Maturity

The date on which a financial instrument, such as a bond or loan, reaches its due date and the principal amount must be repaid.

Zero-Coupon Bonds

Debt securities that don't pay periodic interest but are issued at a significant discount to par value, providing profit at maturity when they reach their face value.

Coupon Rate

The annual interest rate paid by a bond's issuer to its holders, expressed as a percentage of the bond's face value.