BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A ratio to determine the efficiency of managing assets in generating revenue.
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Asset utilization ratio
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Leverage ratio
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Liquidity ratio
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Profitability ratio
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Explanation:
Detailed explanation-1: -The asset turnover ratio is a measurement that shows how efficiently a company is using its owned resources to generate revenue or sales.
Detailed explanation-2: -The asset turnover ratio is calculated on an annual basis. A higher asset turnover ratio means the company’s management is using its assets more efficiently, while a lower ratio means the company’s management isn’t using its assets efficiently.
Detailed explanation-3: -Return on assets (ROA) ratio tells how well management is utilizing the company’s various resources (assets). It is calculated by dividing net profit (before taxes) by total assets. The number will vary widely across different industries.
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