It Is Appropriate to Use the Fixed Assets Turnover Ratio

question 75

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 of the firms being compared have the same proportion of fixed assets to total assets.

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Definitions:

Payback Method

A capital budgeting technique that calculates the amount of time required to recoup the original investment.

Cash Flows

The total incoming and outgoing monetary flow in a commerce, influencing its immediate financial capabilities.

Annuity Stream

A series of fixed payments made at equal intervals over a specified period of time.

IRR Rate

The Discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero, used to assess the profitability of investments.