One of the Following Statements Is NOT True of Asset

question 62

Multiple Choice

One of the following statements is NOT true of asset turnover ratios.

• A) Asset turnover ratios measure the level of sales per dollar of assets that the firm has.
• B) The fixed assets turnover ratio is less significant for equipment-intensive manufacturing industry firms than the total assets turnover ratio.
• C) The higher the total asset turnover, the more efficiently management is using total assets.
• D) All of the above are true.

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Definitions:

Unit Contribution Margin

Unit contribution margin is the difference between the selling price of a product and its variable costs, indicating how much each unit sold contributes to covering fixed expenses and generating profit.

Sales

The total revenue generated from goods or services sold by a company over a specified period.

Pretax Income

The amount of income earned by a business before any taxes have been deducted.

Fixed Costs

Fixed costs are business expenses that do not change with the level of goods or services produced by the business, such as rent, salaries, and insurance.