In Words, What Does a Total Asset Turnover of 1

question 289

Multiple Choice

In words, what does a total asset turnover of 1.5 times mean?

• A) For each $1 of sales generated the firm has total assets of $1.50.
• B) For each $1 of total assets, the firm generated $1.50 in sales.
• C) For each $1 of total assets, the firm generated $1.50 in net income.
• D) For each $1 of net income generated, the firm has total assets of $1.50.
• E) The firm completely replaces its fixed assets three times each year, on average.

---

Definitions:

Profit-Maximizing Result

The outcome in which a firm achieves the highest possible profit given its constraints and market conditions.

Overhead Allocation

The process of distributing indirect costs to different products, services, projects, or departments within a company.

Direct Labor Hour

The amount of time spent by workers in producing a product or service.

Machine Hour

A unit of measure representing the operation of a machine for one hour, often used in cost accounting to allocate expenses.