Which Ratio Assesses How Efficiently a Firm Uses Its Fixed

question 13

Multiple Choice

Which ratio assesses how efficiently a firm uses its fixed assets?

• A) capital intensity ratio
• B) current ratio
• C) average collection period
• D) fixed asset turnover

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Definitions:

Cost of Goods Sold

Costs directly incurred from the process of manufacturing goods that a company sells, including the costs of materials and labor.

Merchandise Sales

The revenue generated from selling goods that a company has purchased or produced for resale.

Gross Margin

The difference between revenue and cost of goods sold, which represents the total profit before deducting operating expenses.

Net Amounts

The remaining values after all deductions, such as discounts or expenses, have been made.