Which of the following describes the asset turnover ratio?
A) Average total assets divided by sales
B) Net sales divided by net income
C) Net sales divided by average total assets
D) Average total assets divided by net income

Question

Quizplus · Accepted Answer

The asset turnover ratio is calculated as net sales divided by average total assets. It measures how efficiently a company uses its assets to generate revenue. A higher ratio indicates that a company is generating more revenue per dollar of assets, which is generally considered favorable.

Which of the Following Describes the Asset Turnover Ratio