Question

A company has an asset turnover ratio of 1.15. Which of the following statements is true?

A. The company generates $1.15of net income for every $1 in reported assets
B. The company buys assets more frequently than it sells them.
C. The company generates $1.15 of sales revenue for every $1 in reported assets.
D.This is improvement over the previous period when the asset turnover rate was 1.7.

Answer 1

The company generates $1.15 of sales revenue for every $1 in reported assets.

Step-by-step explanation:

The asset turnover ratio is a financial metric that measures a company's ability to generate sales revenue from its assets. It is calculated by dividing net sales by average total assets. In this case, the company has an asset turnover ratio of 1.15, which means that for every $1 in reported assets, the company generates $1.15 of sales revenue.

Therefore, the correct statement is option C: The company generates $1.15 of sales revenue for every $1 in reported assets.