A Fixed Asset Turnover Ratio of 1

question 18

Multiple Choice

A fixed asset turnover ratio of 1.65 for a company indicates that:

• A)a company is generating $1.65 of sales per average dollar of fixed asset.
• B)a company is generating $1.65 of net income per average dollar of fixed asset.
• C)a company has $1.65 of long term debt for every dollar of fixed asset.
• D)a company has $1.65 of current assets for every dollar of fixed asset.

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Definitions:

Revenue Recognition

The principle that dictates the specific conditions under which revenue can be recognized by an entity in its financial statements.

Revenue Recognition

This is an accounting principle that dictates the specific conditions under which income becomes recognized as revenue.

Indirect Costs

Expenses not directly tied to a specific project, product, or service but necessary for the general operation of an organization, such as utilities, rent, and administrative salaries.

Direct Costs

Expenses that can be directly linked to the production of specific goods or services, like materials and labor.