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1 Firm A: Assets Current assets Fixed assets Total assets 4 10 14 Firm B: Assets Current assets Fixed assets Total assets 7 7 14
1 Firm A: Assets Current assets Fixed assets Total assets 4 10 14 Firm B: Assets Current assets Fixed assets Total assets 7 7 14 12 Firm A: Total sales 12 Cost of sales -5 Gross Profit 7 Firm B: Total sales Cost of sales Gross Profit -7 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? 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. Asset turnover ratios indicate that firm A is generating greater revenue per dollar of assets than firm B. 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
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