The Formula to Calculate the Asset Turnover Ratio Is

question 23

Multiple Choice

The formula to calculate the asset turnover ratio is:

• A) average total assets divided by net sales.
• B) net sales divided by average total assets.
• C) average cost of assets divided by depreciation expense.
• D) depreciation expense divided by average cost of assets.

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Definitions:

Selling Price

The amount of money charged for a product or service, or the sum for which something is sold.

Margin of Safety

The difference between actual sales and the break-even point, indicating how much sales can fall before a business incurs a loss.

Fixed Expenses

Costs that do not vary with the level of production or sales, remaining constant over a period of time.

Variable Expenses

Charges that adjust directly with the volume of production or sales, encompassing costs related to raw materials and direct labor.