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avinash0312 avinash0312
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Posts: 474
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4 years ago
Firm A: Firm B:
Assets Assets
Current assets 4Current assets 7
Fixed assets 10Fixed assets 7
Total assets 14Total assets 14
Firm A:Firm B:
      Total sales12Total sales12
      Cost of sales-5Cost of sales-7
Gross Profit7Gross Profit5

Above are portions of the balance sheet and income statement for two companies in 2008. Based upon this information, which of the following statements is most likely to be true?

▸ Asset turnover ratios indicate that firm A is generating greater revenue per dollar of assets than firm B.

▸ Both asset turnover ratios and fixed asset turnover ratios indicate that firm A is generating greater revenue per dollar of assets than firm B.

▸ Fixed asset turnover ratios indicate that firm A generating more sales for the assets they employ than firm B.

▸ Fixed asset turnover ratios indicate that firm A generating fewer sales for the assets they employ than firm B.
Textbook 
Fundamentals of Corporate Finance

Fundamentals of Corporate Finance


Edition: 2nd
Authors:
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DryPhantomDryPhantom
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4 years ago
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avinash0312 Author
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4 years ago
Thanks
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