A firm's total asset turnover increased from 0.75 to 0.90. Which of the following is true about the given data?
A) Its assets have been efficiently used to derive the optimum level of sales.
B) Its assets have been efficiently used to derive the optimum level of net income.
C) Its assets have been efficiently used to derive the minimum level of net income.
D) Its assets have been efficiently used to derive the minimum level of gross profit.

Question

Quizplus · Accepted Answer

Total asset turnover measures how efficiently a company is using its assets to generate revenue. An increase in total asset turnover from 0.75 to 0.90 indicates that the firm has become more efficient in using its assets to generate sales. Therefore, option A is correct because the firm has efficiently used its assets to derive the optimum level of sales. Option B, C, and D cannot be inferred from the given data.

A Firm's Total Asset Turnover Increased from 0