What does it mean if a company's capital intensity ratio is 2.4? Multiple choice question. The firm needs $2.40 in equity to generate $1 in sales. The firm requires $2.40 in assets to generate $1 in sales. The shareholders earn $2.40 in profit for every $1 invested in assets. The firm generates $2.40 in sales for every $1 invested in assets.
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The capital intensity ratio is generally defined as follows: a. Sales divided by total assets, i.e., the total assets turnover ratio. b. The percentage of liabilities that increase spontaneously as a percentage of sales. c. The amount of assets required per dollar of sales, or A0/S0. d. The ratio of current assets to sales. e. The ratio of sales to current assets.
Nick J.
Narayan H.
two firm's with the identical capital intensity ratios are generally the same amount of sales. however Firm A is operating at full capacity while Firm B is operating below capacity. if the two firms expect the same growth in sales during the next period, then firm A is likely to need more additional funds then firm B other things held constant
Rashmi S.
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