Final answer:
An above-average (sales/average net fixed assets) ratio often indicates that a firm has either a substantial amount of old plant and equipment, or it is managing assets very effectively to maximize sales. Older plants and equipment can reduce the book value of net fixed assets, which, in turn, raises the ratio.
Step-by-step explanation:
A ratio of (sales/average net fixed assets) that exceeds the industry average suggests that a firm is using its assets efficiently to generate sales. This scenario is indicated by option c: the firm has a substantial amount of old plant and equipment. Older assets might be fully depreciated and can often incur lower accounting costs in financial statements. This can potentially result in a high sales-to-net fixed assets ratio as the average cost of fixed assets used in the denominator is reduced, thereby elevating the ratio when compared to newer assets with higher book values.
It's important to note that a high ratio does not always imply a firm has aged equipment; it might also indicate that they are managing their assets very effectively to maximize sales output. However, in comparison to the other options presented, having older plants and equipment is the most plausible explanation for a ratio that is significantly higher than the industry average.