Total asset turnover is used to evaluate:
A) The relation between asset cost and book value.
B) The efficient use of assets to generate sales.
C) The cash flows used to acquire assets.
D) The necessity for asset replacement.
E) The number of times operating assets were sold during the year.

Question

Quizplus · Accepted Answer

Total asset turnover measures how efficiently a company is able to use its assets to generate sales. It is calculated by dividing total sales by total assets. It shows how much revenue is generated for each dollar invested in assets. It does not reflect the relation between asset cost and book value, cash flows used to acquire assets, necessity for asset replacement or the number of times operating assets were sold during the year.

Total Asset Turnover Is Used to Evaluate