If a Firm's Total Asset Turnover Is Low,but Its Fixed

question 56

Multiple Choice

If a firm's total asset turnover is low,but its fixed asset turnover is high,which of the following ratios should an analyst examine to locate the source of the problem?

• A) Debt/equity
• B) Price/earnings
• C) Return on equity
• D) Accounts receivable turnover
• E) Times interest earned

---

Definitions:

Profit-volume Chart

A graphical representation that shows the relationship between a company's profits and its volume of sales.

Sales Mix

The proportion of different products or services that a company sells, affecting its overall profitability due to varying margins.

Margin Of Safety

The difference between actual sales and break-even sales, indicating the amount by which sales can drop before the business incurs a loss.

Contribution Margin Ratio

A measure of the profitability of a product, defined as the difference between the sales price and variable costs, expressed as a percentage of sales price.