What information do we get from calculating the total asset turnover ratio?
A) It measures how more turnover means a worse use of assets and lower turnover means a better turnover of assets.
B) It measures how revenues increase as total assets increase and the business grows.
C) It measures how assets decrease as revenue decrease and the business declines.
D) It measures how intensively a firm's total assets are used to generate revenue.

Question

Quizplus · Accepted Answer

The total asset turnover ratio measures how effectively a company uses its total assets to generate revenue, indicating the efficiency of asset use in producing sales. It does not directly measure growth, decline, or the quality of asset use based on higher or lower turnover rates in the ways described by the other options.

What Information Do We Get from Calculating the Total Asset