Shares outstanding of common stock = 1,000,000
Shares outstanding of preferred stock = 500,000
Market price of common stock = $18.
-The Total Asset Turnover ratio is:
A) 4.25 times
B) 0.235 times
C) 2.35 times
D) 4.25%

Question

Shares outstanding of common stock = 1,000,000 
Shares outstanding of preferred stock = 500,000 
Market price of common stock = $18.
-The Total Asset Turnover ratio is:
A) 4.25 times 
B) 0.235 times 
C) 2.35 times 
D) 4.25%

Quizplus · Accepted Answer

The Total Asset Turnover ratio is a financial metric that measures the efficiency of a company's use of its assets to generate sales revenue. It is calculated by dividing the company's total sales or revenue by its total assets. The ratio is expressed as a number of times, indicating how many times the total assets are "turned over" during the period. Therefore, a ratio like 0.235 times is a plausible value for the Total Asset Turnover ratio, indicating that for every dollar in assets, the company generates $0.235 in sales. Percentages (like 4.25%) are not used to express this ratio, making options A, C, and D incorrect for this specific financial metric.

Shares Outstanding of Common Stock = 1,000,000