The Asset Turnover Ratio Is the Relationship Between

question 187

Multiple Choice

The asset turnover ratio is the relationship between:

• A) sales and average total assets
• B) average sales and average total assets
• C) average sales and total assets
• D) sales and total assets

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Definitions:

Annual Net Income

The total profit of a company after all expenses and taxes have been deducted from revenues over a year.

Payback Period

The amount of time it takes for an investment to generate enough cash flow to recover its initial cost.

Accounting Rate of Return

A method used to determine the profitability of an investment, calculated by dividing the average annual accounting profit by the initial investment cost.

Straight-Line Depreciation

A methodology for dispensing the cost of a durable asset over its useful period in uniform annual allocations.