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

question 127

True/False

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

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Definitions:

Turnover

Turnover refers to the rate at which employees leave a workforce and are replaced, or the total volume of sales made by a company during a particular period.

Return on Investment

A performance measure used to evaluate the efficiency or profitability of an investment, expressed as a percentage of the return on the investment relative to its cost.

Margin

The difference between the selling price of a product and its cost of production.

Net Operating Income

A measure of a company's profitability from its regular business operations, excluding income from investments or taxes.