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SSC Audit Tax Finance P-II QUESTION #6195
Question 1
A 'Capital Intensity Ratio' of $1.20$ means that:
  • The firm needs $\$1.20$ in assets to generate $\$1$ in sales.✔️
  • The firm generates $\$1.20$ in sales for every $\$1$ in assets.
  • Profit margin is $1.20\%$.
  • Debt is $1.20$ times equity.
Correct Answer Explanation
This ratio indicates the dollar amount of assets required to produce one dollar in sales [cite: 42].