What is asset turnover?
A)How quickly a company generates profit from its assets
B)How quickly a company is turning its net income into cash
C)The overall efficiency with which the company uses assets to generate revenues
D)How quickly the company acquires economic resources

Question

Quizplus · Accepted Answer

Asset turnover is a financial ratio that measures how efficiently a company uses its assets to generate revenues. It is calculated by dividing the company's revenue by its total assets. A higher asset turnover ratio indicates that the company is generating more revenue from its assets, which suggests that it is using its resources efficiently. Choice A is incorrect because it refers to the profitability of assets rather than their efficiency. Choice B is incorrect because it measures the speed at which a company transforms its revenue into cash, which is not related to the efficiency of asset usage. Choice D is incorrect because it refers to the speed at which a company acquires resources, which is not related to how efficiently it uses those resources.

What Is Asset Turnover