If a Firm's Fixed Assets Turnover Ratio Is Significantly Higher

question 95

True/False

If a firm's fixed assets turnover ratio is significantly higher than its industry average,this could indicate that it uses its fixed assets very efficiently or is operating at over capacity and should probably add fixed assets.

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Definitions:

Promissory Note

A financial instrument in which one party promises in writing to pay a determinate sum of money to the other, either at a fixed or determinable future time or on demand.

Conditional Sales Contract

A sale agreement stating that the sale is conditional upon certain terms, often including the circumstances under which ownership is transferred.

Invoice

A document issued by a seller to a buyer, detailing a transaction and requesting payment for goods supplied or services rendered.

Open Account

A credit arrangement where goods or services are sold without immediate payment, allowing the buyer to pay at a later scheduled date.