A Total Asset Turnover Ratio of 3

question 47

Multiple Choice

A total asset turnover ratio of 3.5 indicates that:

• A) For every $1 in sales, the firm acquired $3.50 in assets during the period.
• B) For every $1 in assets, the firm produced $3.50 in net sales during the period.
• C) For every $1 in assets, the firm earned gross profit of $3.50 during the period.
• D) For every $1 in assets, the firm earned $3.50 in net income.
• E) For every $1 in assets, the firm paid $3.50 in expenses during the period.

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Definitions:

Stock Investment

The purchase of shares in a company to gain a financial return in the form of dividends or appreciation in the share price.

Equity Method Investments-Jay

An accounting technique used to record investments in other companies, where the investment is significant but less than controlling, adjusting the value to account for the investor's share of the earnings or losses.

Cash Dividends

A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.

Foreign Exchange Rate

The rate at which one currency can be swapped for a different currency.