Firm A: Assets Current assets 4 Fixed assets 10 Total assets 14 Firm A: Total sales 12 Cost of sales -5 7 Gross Profit Firm B: Assets Current assets 7 Fixed assets 7 Total assets 14 Firm B: 12 Total sales Cost of sales -7 Gross Profit 5 Above are portions of the balance sheet and income statement for two companies in 2018. Based upon this information, which of the following statements is most likely to be true? O Current asset turnover indicates greater liquidity for firm B than firm A. Both asset turnover ratios and fixed asset turnover ratios indicate that firm A is generating greater revenue per dollar of assets than firm B. O Asset turnover ratios indicate that firm A is generating greater revenue per dollar of assets than firm B. O Fixed asset turnover ratios indicate that firm A generating more sales for the assets it employs than firm B. Fixed asset turnover ratios indicate that firm A generating fewer sales for the assets it employs than firm B.

Firm A: Assets Current assets 4 Fixed assets 10 Total assets 14 Firm A: Total sales 12 Cost of sales -5 7 Gross Profit Firm B: Assets Current assets 7 Fixed assets 7 Total assets 14 Firm B: 12 Total sales Cost of sales -7 Gross Profit 5 Above are portions of the balance sheet and income statement for two companies in 2018. Based upon this information, which of the following statements is most likely to be true? O Current asset turnover indicates greater liquidity for firm B than firm A. Both asset turnover ratios and fixed asset turnover ratios indicate that firm A is generating greater revenue per dollar of assets than firm B. O Asset turnover ratios indicate that firm A is generating greater revenue per dollar of assets than firm B. O Fixed asset turnover ratios indicate that firm A generating more sales for the assets it employs than firm B. Fixed asset turnover ratios indicate that firm A generating fewer sales for the assets it employs than firm B.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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