Asked by Gerson Torres on Jun 15, 2024
Verified
Profit margin can be determined by multiplying the asset turnover by the return on assets.
Profit Margin
Profit Margin is a financial metric that measures the amount of profit a business makes per dollar of revenue, indicating efficiency in controlling costs.
Asset Turnover
A financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue.
Return On Assets
A financial ratio that measures the efficiency of a company's assets in generating profit, calculated as net income divided by total assets.
- Determine and explain the significance of the asset turnover ratio.
Verified Answer
AP
Amanda PlevickJun 17, 2024
Final Answer :
False
Explanation :
Profit margin is calculated by dividing net income by revenue. Asset turnover and return on assets are different financial metrics that do not directly calculate profit margin.
Learning Objectives
- Determine and explain the significance of the asset turnover ratio.