An asset turnover ratio of 1.75 can be interpreted as:
A) $1.75 in sales are generated by every $1 of assets.
B) $1.75 in additional assets are generated by every $1 of sales.
C) $1.75 in assets are used to generate $1 of sales.
D) $1 in sales are used to generate $1.75 in assets.

Question

Quizplus · Accepted Answer

The asset turnover ratio indicates how efficiently a company uses its assets to generate sales. A ratio of 1.75 means that for every $1 of assets, the company generates $1.75 in sales.

An Asset Turnover Ratio of 1