Asset Turnover Is Calculated as Follows

question 208

Multiple Choice

Asset turnover is calculated as follows:

• A) net sales divided by average total assets.
• B) property, plant and equipment divided by total assets.
• C) long-lived assets divided by total sales.
• D) net sales divided by net long-lived assets.

---

Definitions:

EFN

Expected Funds Needed, an estimation of the additional financing a company will require in the future based on its projected growth and existing financial structure.

Sustainable Growth Rate

The maximum rate at which a company can grow its sales and earnings without increasing leverage or debt financing.

Leverage Ratios

Financial metrics that assess the level of debt in a company's capital structure relative to its equity or assets.

Dividend Policy

A company's approach to distributing profits back to its shareholders, whether through cash dividends, stock dividends, or share repurchase plans.