Question

Assume three companies in the same industry have the following asset turnover ratios:

Waters Co. = 3.7%
Xenon Co. = 2.4%
Zenith Co. = 2.6%

Based on this information alone, which company appears to have the worst asset turnover ratio?

Answer 1

Waters Co. appears to have the worst asset turnover ratio.

Step-by-step explanation:

The asset turnover ratio is calculated by dividing the net sales of a company by its average total assets.

Based on the provided information, Waters Co. has the highest asset turnover ratio at 3.7%. This means that Waters Co. generates more sales per dollar of assets compared to Xenon Co. (2.4%) and Zenith Co. (2.6%). Therefore, Xenon Co. appears to have the worst asset turnover ratio among the three companies.