It Is Appropriate to Use the Fixed Assets Turnover Ratio

question 99

True/False

It is appropriate to use the fixed assets turnover ratio to appraise firms' effectiveness in managing their fixed assets if and only if all the firms being compared have the same proportion of fixed assets to total assets.

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Definitions:

Depreciation

An accounting method of allocating the cost of a tangible asset over its useful life, representing how much of an asset's value has been used up over time.

CCA Rate

The rate at which a business can claim Capital Cost Allowance, which is depreciation for tax purposes.

Marginal Tax Rates

This is the percentage of tax applied to your next dollar of income, varying with taxpayers' income levels within defined tax brackets.

Eligible Dividends

Eligible dividends are those paid by Canadian corporations to Canadian residents, which are eligible for an enhanced dividend tax credit.