Assuming Two Companies Use the Same Accounting Methods,other Things Being

question 227

Multiple Choice

Assuming two companies use the same accounting methods,other things being equal,the company with a higher fixed asset turnover ratio:

• A)has a greater amount invested in fixed assets than a company with a lower fixed asset turnover ratio.
• B)has less invested in fixed assets than a company with a lower fixed asset turnover ratio.
• C)generates less sales revenue than a company with a lower fixed asset turnover ratio.
• D)makes better use of its fixed assets to generate revenues than a company with a lower fixed asset turnover ratio.

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Definitions:

Option

A financial contract granting the buyer the right, but not the obligation, to buy or sell an asset at a set price within a specific time.

Asian Options

A type of option where the payoff depends on the average price of the underlying asset over a certain period of time rather than at maturity.

American Options

Options that can be exercised at any time before expiration, as opposed to European options which can only be exercised on the expiration date.

European Options

Financial derivatives that give the holder the right to buy or sell an underlying asset at a specified price, but only on the option's expiration date.