Ratios: Total Asset Turnover Video Lessons

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Problem: Over the past year, Roberts & Co. has realized an increase in its current ratio and a drop in its total asset turnover ratio.  However, the company’s sales, quick ratio, and fixed asset turnover ratio have remained constant.  What explains these changes? a. Net income has risen. b. Current liabilities have risen. c. The company is holding excessive levels of cash. d. Inventory levels have increased. e. Fixed assets have increased.

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Problem Details

Over the past year, Roberts & Co. has realized an increase in its current ratio and a drop in its total asset turnover ratio.  However, the company’s sales, quick ratio, and fixed asset turnover ratio have remained constant.  What explains these changes?

a. Net income has risen.

b. Current liabilities have risen.

c. The company is holding excessive levels of cash.

d. Inventory levels have increased.

e. Fixed assets have increased.

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