The Asset Turnover Ratio

question 66

Multiple Choice

The asset turnover ratio

• A)Is computed by dividing net sales (income statement account) by average total assets (statement of financial position account).
• B)Measures how efficiently a company is using its net sales to purchase and use fixed assets.
• C)Measures how many dollars are invested in fixed assets per dollar of net sales.
• D)All of the choices are correct regarding the asset turnover ratio.

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Definitions:

Actual Values

The real, measured values obtained from data collection as opposed to predicted or estimated figures.

Unusual Events

Occurrences that deviate significantly from the norm, which can impact operations, finances, or safety in various contexts.

Mean Absolute Deviation

A measure of variability that shows the average distance between each data point and the mean of the data set.

Correlation Coefficient

A statistical measure that calculates the strength and direction of a linear relationship between two quantitative variables.