Question

Reasons for increased asset turnover and a lower net profit margin:

A. Efficient use of assets and high sales prices.
B. Inefficient use of assets and low sales volume.
C. Efficient use of assets and low sales prices.
D. Inefficient use of assets and high sales volume.

Answer 1

The correct answer is D. Inefficient use of assets and high sales volume.

Step-by-step explanation:

The correct answer is D. Inefficient use of assets and high sales volume.

Asset turnover measures how efficiently a company uses its assets to generate sales. An increased asset turnover indicates that the company is using its assets well to generate higher sales volume. On the other hand, a lower net profit margin suggests that the company is making less profit from each dollar of sales. This could be due to inefficiencies in the use of assets or high sales volume with lower profit margins.