The asset turnover measures
A) how often a company replaces its assets.
B) how efficiently a company uses its assets to generate sales.
C) the portion of the assets that have been financed by creditors.
D) the overall rate of return on assets.

Question

Quizplus · Accepted Answer

The asset turnover measures how efficiently a company uses its assets to generate sales. It is calculated by dividing the company's net sales by its average total assets. It does not measure how often a company replaces its assets, the portion of assets financed by creditors, or the overall rate of return on assets.

The Asset Turnover Measures