Asset turnover equals
A)income divided by average assets.
B)sales divided by assets.
C)sales divided by average assets.
D)assets divided by sales.

Question

Quizplus · Accepted Answer

Asset turnover ratio measures how efficiently a company utilizes its assets to generate revenue. It is calculated by dividing the sales by the average assets. Therefore, option C is the correct answer. Option A is incorrect because income is not used to measure asset utilization. Option B and D are incorrect because they do not use the average assets but only assets or sales which does not give an accurate representation of asset turnover ratio.

Asset Turnover Equals