Which of the Following Ratios Measures How Efficiently the Firm

question 68

Multiple Choice

Which of the following ratios measures how efficiently the firm uses all of its assets to generate sales?

• A) Fixed asset turnover
• B) Total asset turnover
• C) Debt ratio
• D) Times interest earned ratio

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Definitions:

Net Present Value

A method for evaluating the profitability of an investment, calculating the difference between the present value of cash inflows and outflows.

Monthly Interest Rate

The interest rate applied to a loan or debt for one month, often used to calculate the monthly interest payment.

Variable Cost

Costs that vary directly with the level of production or the volume of services provided.