Your local hardware store has a fixed asset turnover rate of 1.69 and a total as
ID: 2615535 • Letter: Y
Question
Your local hardware store has a fixed asset turnover rate of 1.69 and a total asset turnover rate of 1.79. You notice that Home Depot has a fixed asset turnover rate of 2.61 and a total asset turnover rate of 1.34. Based on this information, your local hardware store appears to be:
Your local hardware store has a fixed asset turnover rate of 1.69 and a total asset turnover rate of 1.79. You notice that Home Depot has a fixed asset turnover rate of 2.61 and a total asset turnover rate of 1.34. Based on this information, your local hardware store appears to be:
Your local hardware store has a fixed asset turnover rate of 1.69 and a total asset turnover rate of 1.79. You notice that Home Depot has a fixed asset turnover rate of 2.61 and a total asset turnover rate of 1.34. Based on this information, your local hardware store appears to be: Utilizing its fixed assets more efficiently than Home Depot. Utilizing its total assets more efficiently than Home Depot. Generating $1.69 in net income for every $1 in net fixed assets. Maintaining the same level of current assets as Home Depot. Generating $1 in sales for every $1.69 in net fixed assets.Explanation / Answer
Correct option is 2nd option > Utilizing its total assets more efficiently than Home Depot
Reason:
Total asset turnover rate = Net Sales / Average total asset
Total asset turnover rate for local hardware store is 1.79 in comparison of 1.34 of Home Depot. The higher of total asset turnover rate suggests efficiency of the entity. Higher ratio is better the utilization of total asset.
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