Question

A ratio used to measure how effectively a manager is using plant, property, and equipment is the ______ ratio?

1) fixed-asset turnover
2) return on equity
3) return on sales
4) current

Answer 1

The fixed-asset turnover ratio is used to measure how effectively a manager is using plant, property, and equipment. It shows how efficiently a company is generating sales from its investment in fixed assets.

Step-by-step explanation:

The ratio used to measure how effectively a manager is using plant, property, and equipment is the fixed-asset turnover ratio. This ratio is calculated by dividing the net sales by the average fixed assets. It shows how efficiently a company is generating sales from its investment in fixed assets, such as buildings, machinery, and equipment. A higher fixed-asset turnover ratio indicates better utilization of these assets.