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Basic Question 3 of 4
Which of the following statements about the fixed asset turnover ratio is true in a period of an appreciating local currency and the use of the current rate method?
B. The current rate method results in a higher fixed asset turnover ratio than the temporal method.
C. The fixed asset turnover ratio is the same under either method.
A. The current rate method results in a lower fixed asset turnover ratio than the temporal method.
B. The current rate method results in a higher fixed asset turnover ratio than the temporal method.
C. The fixed asset turnover ratio is the same under either method.
User Contributed Comments 3
| User | Comment |
|---|---|
| turtle | fixed asset turnover ratio is: sales/fixed assets sales remain the same under both methods. if local currency appreciates, than fixed assets in USD terms at the end of the period are worth more than at the begining -> number is higher under all current method. conclusion: fixed assets turnover ratio is lower under all current method, if local currency appreciates. |
| arudkov | thks turtle |
| Roy1 | >> turtle Nice one! |
I used your notes and passed ... highly recommended!
Lauren
Learning Outcome Statements
analyze how the current rate method and the temporal method affect financial statements and ratios;
CFA® 2025 Level II Curriculum, Volume 2, Module 12.