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Fixed asset turnover ratio would increase if (choose all that apply) a. decrease in utility expense...

Fixed asset turnover ratio would increase if (choose all that apply)

a. decrease in utility expense

b. sale of manufacturing equipment

c. Increase in rent expense

d. decrease in sales discounts

e. decrease in sales

f. purchase of new equipment

business   accounting   
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Answer #1

Fixed asset turnover ratio is calculated by dividing Net sales by Average fixed assets , Hence increase in sales and decrease in fixed assets would result in increase in fixed asset turnover ratio. Therefore, Sale of manufacturing equipment would result in decrease in average fixed asset and decrease in sales discounts would result in increase in net sales.

Hence, Option b and d would result in increase in fixed asset turnover ratio.

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