Changes in the total asset turnover ratio may indicate changes in:
A)financing decisions.
B)cost structure.
C)product profitability.
D)sales volume.

Question

Quizplus · Accepted Answer

The total asset turnover ratio measures how efficiently a company uses its assets to generate sales. A decrease in the ratio may indicate a decrease in sales volume, whereas an increase may indicate an increase in sales volume. Therefore, changes in the total asset turnover ratio are likely to indicate changes in sales volume.

Changes in the Total Asset Turnover Ratio May Indicate Changes