Asked by Isaiah Tijero on May 14, 2024
Verified
Which of the following is the formula for measuring asset turnover?
A) Current Assets ÷ Current Liabilities
B) Current Assets - Inventories ÷ Current Liabilities
C) Sales ÷ Total Assets
D) Net Income ÷ Total Assets
E) Total Debts ÷ Total Assets
Asset Turnover
Asset turnover is a financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue.
Current Assets
Assets that are expected to be converted into cash, sold, or consumed within a year or within the operating cycle of a business, like cash, inventory, and receivables.
Total Assets
The sum of all resources owned by an entity, including both current and non-current assets, which can be used to generate value or meet obligations.
- Gain insight into the concepts and quantitative analysis relevant to the management of assets and leverage application.
Verified Answer
MA
Maysa Al-HijaziMay 19, 2024
Final Answer :
C
Explanation :
Asset turnover is a measure of a company's efficiency in using its assets to generate revenue or sales. The formula for measuring asset turnover is total sales divided by total assets. Option C is the correct formula to measure asset turnover. Option A is the formula for calculating the current ratio, option B is the formula for calculating the quick ratio, option D is the formula for calculating return on assets (ROA), and option E is the formula for calculating the debt ratio.
Learning Objectives
- Gain insight into the concepts and quantitative analysis relevant to the management of assets and leverage application.