A company had average total assets of $600,000 and an asset turnover ratio of 4. Which of the following is not true?
A)Sales revenue was $2,400,000.
B)The asset turnover ratio indicates $4 of sales were generated for every $1 invested in assets.
C)The asset turnover ratio is an indication of the efficiency in the use of assets to generate revenues.
D)The asset turnover ratio indicates the success of efforts to control expenses.

Question

Quizplus · Accepted Answer

The asset turnover ratio measures the efficiency in using assets to generate revenues, but it does not indicate anything about the success of efforts to control expenses.

A Company Had Average Total Assets of $600,000 and an Asset