A Total Asset Turnover Measure of 0

question 36

Multiple Choice

A total asset turnover measure of 0.84 means that a firm has $0.84 in

• A)sales for every $1 in total assets.
• B)total assets for every $1 in sales.
• C)total assets for every $1 in total equity.
• D)total assets for every $1 in cash.
• E)long-term assets for every $1 in total assets.

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Definitions:

Acid-test Ratio

A financial metric that assesses a company's ability to pay its current liabilities with its most liquid assets.

Liquidity Problems

Financial difficulties arising from an entity's inability to quickly convert assets into cash without significant loss, impacting its capacity to meet short-term obligations.

Acid-test Ratio

A stringent indicator that determines whether a firm has enough short-term assets to cover its immediate liabilities without selling inventory.

Quick Assets

Assets that can be quickly converted into cash without a significant loss in value, including cash, marketable securities, and accounts receivable.