If a company had a total assets turnover ratio of 2.1 times this year and 2.9 last year, does the ratio seem to be getting better or worse, and why?
A) The turnover is better because the ratio is going down.
B) The turnover is worse because the ratio is going up.
C) The turnover is better because the ratio is going up.
D) The turnover is worse because the ratio is going down.

Question

Quizplus · Accepted Answer

The total assets turnover ratio measures how efficiently a company uses its assets to generate sales. A higher ratio indicates more efficient use of assets. Therefore, a decrease from 2.9 to 2.1 suggests the company is becoming less efficient, making the turnover worse.

If a Company Had a Total Assets Turnover Ratio of 2.1