Question

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

Texas Co. = 1.7%
Utah Co. = 1.4%
Virginia Co. = 2.1%

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

Answer 1

Based on the given information, Virginia Co. appears to have the best asset turnover ratio.

Step-by-step explanation:

The asset turnover ratio is calculated by dividing a company's net sales by its average total assets. It measures how efficiently a company uses its assets to generate revenue. The higher the ratio, the more effectively a company is utilizing its assets to generate sales. Based on the given information, the company with the highest asset turnover ratio is Virginia Co. with a ratio of 2.1%. This indicates that Virginia Co. is generating more sales relative to its total assets compared to Texas Co. and Utah Co.