Sparks, Inc. has a fixed asset turnover ratio of 9 times. In contrast, the ratio is 4 times for most other firms in its industry. Which one of the following statements would provide the best explanation for this difference? A. Sparks has much older plant facilities than the rest of the industry. B. Sparks has a higher net profit margin percentage. C. Sparks uses just-in-time (JIT) techniques to minimize investment in finished goods. D. Sparks gives short payment terms to its customers which result in fast collections.

Sparks, Inc. has a fixed asset turnover ratio of 9 times. In contrast, the ratio is 4 times for most other firms in its industry. Which one of the following statements would provide the best explanation for this difference? A. Sparks has much older plant facilities than the rest of the industry. B. Sparks has a higher net profit margin percentage. C. Sparks uses just-in-time (JIT) techniques to minimize investment in finished goods. D. Sparks gives short payment terms to its customers which result in fast collections.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter10: Forecasting Financial Statement

Section: Chapter Questions

Problem 4QE: Suppose you are analyzing a firm that is successfully executing a strategy that differentiates its...

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