In words, what does a total asset turnover of 1.5 times mean?
A) For each $1 of sales generated the ﬁrm has total assets of $1.50.
B) For each $1 of total assets, the ﬁrm generated $1.50 in sales.
C) For each $1 of total assets, the ﬁrm generated $1.50 in net income.
D) For each $1 of net income generated, the ﬁrm has total assets of $1.50.
E) The ﬁrm completely replaces its ﬁxed assets three times each year, on average.

Question

Quizplus · Accepted Answer

A total asset turnover of 1.5 times means that for each $1 of total assets, the firm generated $1.50 in sales. This ratio measures how efficiently a company uses its assets to generate revenue.

In Words, What Does a Total Asset Turnover of 1