Which of the Following Statements Is True

question 64

Multiple Choice

Which of the following statements is true?

• A) A larger fixed asset turnover ratio is associated with firms that are more labor intensive and require smaller fixed asset investments.
• B) The fixed asset ratio cannot be compared across time for an individual company.
• C) A smaller fixed asset turnover ratio is associated with firms that are more labor intensive and require smaller fixed asset investments.
• D) The fixed asset ratio is not useful for comparing different companies.

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Definitions:

Journal Entry

A recording of a financial transaction in an accounting journal, indicating the accounts and amounts to be debited and credited.

Interest Expense

The cost incurred by an entity for borrowed funds; interest payments made on debt.

Contract Rate

The agreed-upon rate specified in a contract for the provision of goods or services, often discussed in the context of interest rates or wages.

Market Rate

The prevailing interest rate available in the marketplace for securities or loans.