All Else Held Constant, a Higher Asset Turnover

question 46

Multiple Choice

All else held constant, a higher asset turnover:

• A)increases ROA
• B)decreases ROA
• C)has no effect on ROA
• D)may raise or lower ROA, depending on how it affects revenues.

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Definitions:

Net Income

The amount of profit remaining after all expenses, taxes, and costs have been subtracted from total revenues.

Units-of-production Method

A method of depreciation that allocates the cost of an asset based on its usage, production, or units of activity rather than the passage of time.

Passage of Time

Refers to the progression of time and its implications, often related to depreciation, amortization, and other time-sensitive accounting practices.