Big Valley's Fixed Asset Efficiency Is ___________ the Typical Firm

question 28

Multiple Choice

Big Valley's fixed asset efficiency is ___________ the typical firm in the industry.

• A) the same as
• B) lower than
• C) higher than S/FA = (275 + 500)/400 = 1.9375; Peer S/FA = 1.8

---

Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales activities within a reasonable scale.

Depreciation Expense

The allocation of the cost of an asset over its useful life to gradually reduce its value on the balance sheet.

Operating Cash Flow

Cash generated from the normal operations of a business, reflecting the company's ability to generate sufficient revenue to maintain operations.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance expenses.