Asked by Angelisa Tejeda on Apr 25, 2024
Verified
A measure of asset utilization is
A) sales divided by working capital.
B) return on total assets.
C) return on equity capital.
D) operating profit divided by sales.
E) None of the options are correct.
Asset Utilization
Measures how efficiently a company uses its assets to generate revenue.
Working Capital
The difference between a company's current assets and current liabilities, indicating the liquidity and operational efficiency of the business.
Total Assets
The sum of all current and long-term assets owned by a company, as represented on its balance sheet, indicating the resources it has at its disposal.
- Discern and evaluate different financial ratios signaling liquidity, profitability, and the employment of assets.
- Determine and assess individual business indicators, encompassing leverage ratios, quick ratios, asset turnover rates, and rates of inventory turnover.
Verified Answer
SM
Santiago Mendoza FarietaApr 28, 2024
Final Answer :
B
Explanation :
Return on total assets (ROTA) is a measure of asset utilization as it shows how efficiently a company uses its assets to generate earnings.
Learning Objectives
- Discern and evaluate different financial ratios signaling liquidity, profitability, and the employment of assets.
- Determine and assess individual business indicators, encompassing leverage ratios, quick ratios, asset turnover rates, and rates of inventory turnover.