Question

Trend 2015Ind. Avg. Benchmark 2016 LIQUIDITY Current Quick 1.60 x 0.901x 1.90 1.20 1.80 1.00 ASSET MANAGEMENT Inventory Turnover Days Sales Outstanding Fixed Asset Turnover Total Asset Turnover 2.80 125.00 days 125.00 0.90 0.45 2.75 130.00 0.80 0.40 2.60 x 0.80 x 0.40 x Consider the table above, which of the following is true? O The current ratio is better than return on assets for measuring profitability. The total asset turnover is headed in the wrong direction. O The fixed asset turnover is headed in the right direction. hiiⓤ The days sales outstanding is worse than the industry average.

Answer 1

Option 1 ) Current Ratio is not better than assets turnover ratio this is because current ratio is not with benchmark ind. Avg. so this option is not correct

Option 3 ) Fixed Assets turnover is reduced so this means this is not in right direction, it means the given statement is not correct

Option 4 = Days sales outstanding is less than industry average It means the outstanding of sales is good compare to the industrial average it means this statement is not correct.

Option 2 = Yes, Total Assets turnover is headed in wrong directions so this statement is correct.

Answer = Option 2