The asset turnover ratio (ATR)for Jovial Inc.has evolved as follows over the past three years:
ATR(Y-3)= 200% ATR(Y-2)= 190% ATR(Y-1)= 180%
A) New assets are acquired for the same amount as the annual depreciation expense.
B) Sales revenue grew at a rate that is more rapid than the rate of growth of net assets.
C) Assets are being used more efficiently over time.
D) Assets are being used less efficiently over time.

Question

Quizplus · Accepted Answer

The asset turnover ratio (ATR) measures how efficiently a company uses its assets to generate sales. A declining ATR over time, from 200% to 180%, indicates that the company is generating less revenue per unit of asset, which means assets are being used less efficiently.

The Asset Turnover Ratio (ATR)for Jovial Inc