Which of the Following Situations Is Most Likely to Explain

question 59

Multiple Choice

Which of the following situations is most likely to explain a net operating asset turnover that is higher than the industry norm?

• A) The company has more recently purchased fixed assets
• B) The company uses FIFO while competitors use LIFO
• C) The company uses accelerated depreciation method while competitors use straight line
• D) The company extends more credit to customers than competitors

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Definitions:

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, used in financial analysis to assess investment opportunities.

Interest Rate

The percentage of a sum of money charged for its use, typically expressed as an annual percentage rate.

Capacity Alternatives

Different strategies or options available to an organization to adjust or increase its production or service capacity to meet variations in demand.

Market Acceptance

The degree to which a new product or service is accepted and purchased by customers in the market.