If Net Sales Revenue Rises 5% While the Average Book

question 43

Multiple Choice

If net sales revenue rises 5% while the average book value of fixed assets falls 5%:

• A) the fixed asset turnover ratio will rise.
• B) the fixed asset turnover ratio will fall.
• C) the fixed asset turnover ratio will stay the same.
• D) the impact on the fixed asset turnover ratio cannot be determined since the beginning values are unknown. If sales revenue (the numerator) rises and average net fixed assets falls (the denominator), the ratio will rise.

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Definitions:

Time Series Trend Equation

A mathematical formula that models the underlying trend of a time series data set, often used in forecasting future values based on past data.

Forecast Including Trend

A predictive analysis that accounts for historical data and identifies future patterns, trends, and likely outcomes.

Smoothing Constants

Parameters used in exponential smoothing methods for forecasting that determine the weight given to the most recent observation.