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4. (If a firms total asset turnover ratio is 2.0 a. b. c. d. its annual sales are less than its total assets it is possible that its fixed asset turnover ratio is 1.5 its total assets are two times its annual sales its annual sales are two time its total assets
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Answer #1

Total asset turnover ratio = Annual Sales/Total asset

The total asset turnover ratio calculates net annual sales divided by total assets and shows that how many sales are generated from each dollar of company’s assets.

If a firm’s total asset turnover ratio is 2; then

2 = Annual Sales/Total asset

Or Annual Sales = 2* total assets

It means that its annual sales are two times of its total assets

Therefore correct answer is option d. its annual sales are two times of its total assets

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