It Is Appropriate to Use the Fixed Assets Turnover Ratio

question 106

True/False

It is appropriate to use the fixed assets turnover ratio to appraise firms' effectiveness in managing their fixed assets IF AND ONLY IF all the firms being compared have the same proportion of fixed assets to total assets.

---

Definitions:

Functional Currency

It's the currency of the primary economic environment in which an entity operates and generates cash flows.

Exchange Rates

The price at which one currency can be exchanged for another, influencing international trade and investments.

Exchange Gain

A profit realized from the increase in value of foreign currency assets due to favorable changes in exchange rates.

Functional Currency

A company's primary currency used in its operations and financial reporting, often where the company principally generates and expends cash.