Which of the following ratios is used to evaluate a company's efficiency in using its assets?
A) Current ratio.
B) Debt to assets ratio.
C) Return on equity ratio.
D) Asset turnover ratio.

Question

Quizplus · Accepted Answer

The asset turnover ratio is used to evaluate a company's efficiency in using its assets. It calculates the amount of revenue generated by each dollar of assets. A higher asset turnover ratio indicates that the company is using its assets more efficiently. The current ratio measures a company's short-term liquidity, the debt to assets ratio measures the amount of debt a company has in relation to its assets, and the return on equity ratio measures the return generated by shareholders' investment.

Which of the Following Ratios Is Used to Evaluate a Company's