A total asset turnover measure of 1.03 means that a ﬁrm has $1.03 in:
A) Total assets for every $1 in cash.
B) Total assets for every $1 in total debt.
C) Total assets for every $1 in equity.
D) Sales for every $1 in total assets.
E) Long-term assets for every $1 in short-term assets.

Question

Quizplus · Accepted Answer

Total asset turnover is calculated as sales divided by total assets, which means the firm generates $1 in sales for every $1.03 in total assets. Therefore, D is the correct choice as it indicates sales for every $1 in total assets.

A Total Asset Turnover Measure of 1