Asset Turnover

question 74

Multiple Choice

Asset turnover

• A) is calculated from information found on a firm's income statement.
• B) is calculated by dividing total assets by net sales.
• C) reveals how profitable a company is.
• D) is net sales divided by total assets.
• E) is another term for inventory turnover.

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Definitions:

Capital Structure

The mix of debt and equity financing a company uses to fund its operations and growth.

M&M Proposition II

Modigliani and Miller's Proposition II states that a company's cost of equity increases as it increases its leverage due to the risk premium on equity.

Debt-Equity Ratio

A financial ratio that measures the relative proportion of shareholders' equity and debt used to finance a company's assets.

Financial Risk

The chance of incurring a loss in capital in an investment or business operation.