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If a Firm's Fixed Assets Turnover Ratio Is Significantly Higher

question 127

True/False

If a firm's fixed assets turnover ratio is significantly higher than the average for its industry,then it could be that the firm uses its fixed assets very efficiently or is operating at over capacity and should probably add fixed assets.

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Definitions:

Maker

In the context of finance, refers to the entity that issues or creates a financial instrument, such as a check or note.

Maturity Value

Maturity value is the amount payable to an investment's holder at its maturity date, including the principal and any remaining interest.

Note

A written agreement acknowledging a debt and promising repayment.

Direct Write-off

A method of accounting for bad debts where uncollectible accounts receivable are written off directly against income at the time they are deemed nonrecoverable.

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