Asset Base Decreased Despite Stable Revenue

Steps:

• Non-current asset turnover ratio = net revenue / average non-current assets.
• With revenue unchanged, ratio improves only if average non-current assets decrease.
• Net assets change via additions (purchases), disposals, and depreciation.
• Option C shows net reduction in assets, as depreciation exceeds new asset costs.

Why C is correct:

• Depreciation reduces net book value of assets more than the cost of new additions increases it, lowering the denominator and improving the ratio (formula: turnover = revenue / net assets).

Why the others are wrong:

• A: Irrecoverable debts impact trade receivables (current assets), not non-current assets.
• B: Upwards revaluation increases asset carrying value, raising the denominator and worsening the ratio.
• D: Net purchases (purchases > disposals) increase asset base, raising the denominator and worsening the ratio.

Final answer: C