Which ratio measures how effectively a company utilizes its assets to generate net sales revenue?
AInventory Turnover Ratio
BAccounts Receivable Turnover Ratio
CReturn on Assets
DAsset Turnover Ratio
Explanation
* Asset Turnover Ratio = Net Sales / Average Total Assets.
* It measures operating efficiency in utilizing overall asset base to drive sales volume.
* Higher ratio reflects capital efficiency; lower ratio indicates capital intensity or idle asset capacity.
Exam Relevance
- Topic: Financial Analysis
- Subtopic: Efficiency Ratios
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