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Question:

Which of the following ratios is most likely lower in the early years of an asset’s life if the company uses the straight-line method instead of the double declining balance method for depreciation?

A Asset turnover
explanation

If a company uses straight line depreciation, it will report:
• Lower asset turnover (due to higher net assets).
•Higher operating profit margin (due to lower depreciation expense).
• Higher operating ROA (due to lower depreciation expense).

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