The Capital Intensity Ratio Is Generally Defined as Follows

question 6

Multiple Choice

The capital intensity ratio is generally defined as follows:

• A) The percentage of liabilities that increase spontaneously as a percentage of sales.
• B) The ratio of sales to current assets.
• C) The ratio of current assets to sales.
• D) The amount of assets required per dollar of sales, or A0*/S0.
• E) Sales divided by total assets, i.e., the total assets turnover ratio.

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Definitions:

Variable Costs

Costs that vary directly with the level of production or volume of output, such as raw materials and direct labor.

Fixed Costs

Costs that remain constant regardless of the volume of goods or services produced by a business.

Net Income

The total profit of a company after operating expenses, taxes, and all other incomes and expenses have been deducted from total revenue.

Variable Costs

Costs that change in proportion with the level of production or sales volume, such as materials and labor.