The asset turnover ratio measures
A)how quickly the company uses assets to pay debt.
B)how efficiently assets are used to produce sales.
C)the income produced by selling inventory.
D)how efficiently equity is used to produce revenue.

Question

Quizplus · Accepted Answer

The asset turnover ratio measures how efficiently a company uses its assets to generate sales. It is calculated by dividing net sales by average total assets. It indicates how many dollars of sales are generated by each dollar of assets. Higher ratio implies that the company is using its assets more efficiently to generate revenue.

The Asset Turnover Ratio Measures