The asset turnover is computed by dividing

Question

Quizplus · Accepted Answer

The asset turnover ratio measures how efficiently a company uses its assets to generate revenue. It is calculated by dividing net sales (or revenue) by average total assets. Dividing by ending total assets (choices A and C) does not provide an accurate picture of asset efficiency, as this measure does not take into account changes in assets over the course of the year. Using net income instead of net sales also does not provide an accurate measure of asset efficiency (choice B), as net income includes expenses not related to asset usage.

The Asset Turnover Is Computed by Dividing