A bank has a concern because they feel that a firm has an excessive amount of assets.They do not feel that the firm is efficient in generating sales from their current level of assets.What ratio are they most likely to examine to answer this question?

Question

Quizplus · Accepted Answer

The most relevant ratio in this scenario would be the asset turnover ratio, which is calculated by dividing net sales by total assets. A low asset turnover ratio indicates that the firm is not efficiently using its assets to generate sales revenue. Therefore, the bank would want to examine this ratio to determine if the firm is indeed generating sufficient sales from its level of assets.

A Bank Has a Concern Because They Feel That a Firm