Final answer:
If a firm's net sales are constant while the asset turnover ratio rises, it signifies that the firm's average total assets have decreased. This is because sales per unit of assets have increased, implying more efficient use or a reduction in total assets.
Step-by-step explanation:
If a firm's net sales remained constant but its asset turnover ratio increased, then the firm's average total assets must have B. decreased. The asset turnover ratio is calculated by dividing net sales by average total assets. An increase in the asset turnover ratio, while keeping net sales constant, indicates that the firm is generating more sales per unit of assets, which suggests that the average total assets have become more efficient or are reduced.