Total Asset Turnover Is Calculated by Dividing

question 96

Multiple Choice

Total asset turnover is calculated by dividing:

• A) Gross profit by average total assets.
• B) Average total assets by gross profit.
• C) Net sales by average total assets.
• D) Average total assets by net sales.
• E) Net assets by total assets.

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Definitions:

Present Value Factor

A factor used to calculate the present value of a future amount of money or stream of payments, considering a specific interest rate.

Rate of Return

The gain or loss of an investment over a specified period, expressed as a percentage of the investment’s cost.

Annual Net Cash Inflow

The net amount of cash that flows into a company within a one-year period after all expenditures are subtracted.

Residual Value

The estimated amount for which an asset is expected to be sold at the end of its useful life, after deducting expected costs of disposal.