The ratio commonly used to measure a firm's efficiency at using its assets is the **Asset Turnover Ratio**. This financial metric indicates how effectively a company utilizes its assets to generate sales. The Asset Turnover Ratio is calculated using the following formula:

$$
\text{Asset Turnover Ratio} = \frac{\text{Net Sales}}{\text{Average Total Assets}}
$$

Where:
- **Net Sales** refers to the total revenue from sales, minus returns, allowances, and discounts.
- **Average Total Assets** is typically calculated by averaging the total assets at the beginning and end of a period.

A higher Asset Turnover Ratio suggests greater efficiency in managing assets, as it indicates that the company is generating more sales per dollar of assets it has on the books.

Question

The ratio commonly used to measure a firm's efficiency at using its assets is the **Asset Turnover Ratio**. This financial metric indicates how effectively a company utilizes its assets to generate sales. The Asset Turnover Ratio is calculated using the following formula:

$$
\text{Asset Turnover Ratio} = \frac{\text{Net Sales}}{\text{Average Total Assets}}
$$

Where:
- **Net Sales** refers to the total revenue from sales, minus returns, allowances, and discounts.
- **Average Total Assets** is typically calculated by averaging the total assets at the beginning and end of a period.

A higher Asset Turnover Ratio suggests greater efficiency in managing assets, as it indicates that the company is generating more sales per dollar of assets it has on the books.

Knowee AI · Accepted Answer

The ratio commonly used to measure a firm's efficiency at using its assets is the **Asset Turnover Ratio**. This financial metric indicates how effectively a company utilizes its assets to generate sales. The Asset Turnover Ratio is calculated using the following formula:

$$
\text{Asset Turnover Ratio} = \frac{\text{Net Sales}}{\text{Average Total Assets}}
$$

Where:
- **Net Sales** refers to the total revenue from sales, minus returns, allowances, and discounts.
- **Average Total Assets** is typically calculated by averaging the total assets at the beginning and end of a period.

A higher Asset Turnover Ratio suggests greater efficiency in managing assets, as it indicates that the company is generating more sales per dollar of assets it has on the books.

Which of the following ratios is used to measure a firm's efficiency at using its assets?

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