If management wishes to evaluate how effectively the assets of a business are being used,they could use the:
A)asset turnover.
B)rate of return on common stockholders' equity.
C)acid test ratio.
D)debt to total stockholders' equity.

Question

Quizplus · Accepted Answer

Asset turnover is a financial ratio that measures how efficiently a company is using its assets to generate revenue. It is calculated by dividing the net sales by average total assets. A high asset turnover ratio is an indication that the company is effectively utilizing its assets to generate revenue. Therefore, it is the best choice for evaluating how effectively the assets of a business are being used. The other options, such as rate of return on common stockholders' equity, acid test ratio, and debt to total stockholders' equity, focus on other aspects of financial performance and are not specifically related to asset utilization.

If Management Wishes to Evaluate How Effectively the Assets of a Business