Asset turnover measures
A) how often a company replaces its assets.
B) how eficiently 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

Asset turnover is a financial ratio that measures how efficiently a company uses its assets to generate sales. It is calculated by dividing sales or revenues by the average assets for the period. This ratio 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.

Asset Turnover Measures