With the asset turnover ratio, assets that are not used in producing sales, such as investments, are subtracted from total assets.

Question

Quizplus · Accepted Answer

The asset turnover ratio is calculated by dividing net sales by total assets. Total assets include all assets owned by the company, regardless of whether they are used in producing sales. However, investments are not used in producing sales, so they are subtracted from total assets when calculating the asset turnover ratio.

With the Asset Turnover Ratio, Assets That Are Not Used