Refer to the scenario below to answer the following questions.
Financial Ratios (Scenario)
Jan was in a big hurry. She had just been given the assignment of reporting on the financial health of her company to the new divisional vice-president, Donna. Donna had asked Jan to provide several calculations to help her gain an understanding of the company's financial shape. Jan realized that this was a great career opportunity-one that could make or break her reputation with the new vice-president. She quickly pulled out her old financial management textbook and turned to the chapter on financial ratios to review the required calculations.
-Donna asked Jan to provide her with an estimate of how efficiently the firm is using its assets. Therefore, Jan calculated a(n) __________ ratio called total asset turnover.
A) leverage
B) activity
C) profitability
D) liquidity
E) probability

Question

Quizplus · Accepted Answer

Total asset turnover is a type of activity ratio that shows how efficiently a company is able to use its assets to generate revenue. Leverage ratios measure the company's debt and financing strengths, profitability ratios measure the overall profitability of the company, liquidity ratios measure the company's ability to meet short-term obligations, and probability ratios are not a recognized financial ratio category.

Refer to the Scenario Below to Answer the Following Questions