If Pizza Pizza Reports an Asset Turnover Ratio of 2

question 18

Multiple Choice

If Pizza Pizza reports an asset turnover ratio of 2.34 for 2011 and their competitor Pizza Hut reports 3.79 for their 2011 ratio,it means which of the following?

• A)Pizza Pizza is better able to pay their current obligations with their current assets.
• B)Pizza Pizza has been more effective in managing the use and level of its assets.
• C)Pizza Pizza has been less effective in managing the use and level of its assets.
• D)Pizza Pizza is less able to pay off their current obligations with their current assets.

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Definitions:

Product

A good or service that is created through a process and is available for sale to consumers.

Service

The act of providing assistance or benefits to customers or clients without the sale of tangible goods.

Price Variances

A measurement of the difference between the actual cost of a good or service and its expected cost.

Quantity Variances

Quantity variances are differences between the expected and actual quantities of inputs (materials, labor) used in the production process or during a specific period.