Asked by
DERRICK OBENG
on Nov 08, 2024
Verified
Bob's Toys has a fixed asset turnover rate of 1.2 and a total asset turnover rate of.84. Gerold's Toys has a fixed asset turnover rate of 1.1 and a total asset turnover rate of.96. Both companies have similar operations. Bob's Toys:
A) Is using its fixed assets more efficiently than Gerold's Toys.
B) Is using its total assets more efficiently than Gerold's Toys.
C) Is generating $1 in sales for every $1.20 in net fixed assets.
D) Is generating $1.20 in net income for every $1 in net fixed assets.
E) Has $.84 in total assets for every $.96 Gerold's has in total assets.
Fixed Asset Turnover Rate
A ratio that measures how efficiently a company uses its fixed assets to generate sales.
Total Asset Turnover Rate
A financial ratio that measures the efficiency of a company's use of its assets to generate sales, calculated as sales divided by total assets.
Net Fixed Assets
The value of a company's fixed assets minus depreciation, representing the actual usable value of physical assets.
- Understand essential financial metrics, such as profit margin, fixed asset turnover, and total asset turnover.
Verified Answer
BA
Learning Objectives
- Understand essential financial metrics, such as profit margin, fixed asset turnover, and total asset turnover.