The asset turnover ratio measures how effectively a business is using its assets to generate sales.

Question

Quizplus · Accepted Answer

The asset turnover ratio is calculated by dividing a company's net sales by its average total assets. This ratio indicates how much revenue a company is generating for each dollar of assets it owns. A higher asset turnover ratio typically means that a company is using its assets more efficiently to generate sales. Therefore, the statement is true.

The Asset Turnover Ratio Measures How Effectively a Business Is