If a Company's Asset Turnover Ratio Decreased from Year 1

question 63

Multiple Choice

If a company's asset turnover ratio decreased from Year 1 to Year 2,which of the following conclusions can be made?

• A) The company was more efficient in using its assets to produce profits in Year 2.
• B) The company produced less in sales for each dollar invested in assets in Year 2.
• C) The company was less profitable in Year 1.
• D) The company overinvested in assets in Year 2.

---

Definitions:

Office Supplies

Items used in offices for daily operations, such as paper, pens, and other stationery items, usually considered short-term assets.

Credit Memo

A paper provided by the seller to the buyer that decreases the amount the buyer must pay to the seller, as per a previously issued invoice.

Note Receivable

A written promise for the payment of a specified amount of money, by a debtor to the lender, with interest, at a future date.

Journalize

The process of recording financial transactions in a journal, which is the first step in the accounting cycle.