If the asset intensity is 0.80, the asset turnover would be:
A)0.80 times
B)1.00 times
C)1.25 times
D)1.50 times

Question

Quizplus · Accepted Answer

Asset turnover is calculated as Revenue/ Total Assets. 
Given, Asset intensity = 0.80. 
Asset intensity is the ratio of total assets to sales. 
Therefore, Sales/Total Assets = 0.80
 => Revenue/(Asset Turnover * Total Assets) = 0.80 
=> Asset Turnover = Revenue/Total Assets = 1/0.80 = 1.25 times.

If the Asset Intensity Is 0