Above Are Portions of the Balance Sheet and Income Statement

question 93

Multiple Choice

Above are portions of the balance sheet and income statement for two companies in 2008. Based upon this information, which of the following statements is most likely to be true?

• A)Asset turnover ratios indicate that firm A is generating greater revenue per dollar of assets than firm B.
• B)Fixed asset turnover ratios indicate that firm A generating fewer sales for the assets it employs than firm B.
• C)Both asset turnover ratios and fixed asset turnover ratios indicate that firm A is generating greater revenue per dollar of assets than firm B.
• D)Fixed asset turnover ratios indicate that firm A generating more sales for the assets it employs than firm B.

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Definitions:

Machinery

Assets consisting of tools, equipment, and facilities used in production or manufacturing processes.

Depreciation Expense

The portion of the cost of a fixed asset deducted from revenue of the period, reflecting the use and wear and tear of the asset.

Cash Dividends

A rephrase: A form of profit-sharing where a corporation distributes a portion of its earnings to shareholders in the form of cash.