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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