Question

The amount of sales dollars generated per dollar of invested capital is referred to as ______.

Option 1: Profit Margin
Option 2: Asset Turnover
Option 3: Operating Income Ratio
Option 4: Equity Multiplier

Answer 1

Asset Turnover is the ratio that measures the amount of sales dollars generated per dollar of invested capital, indicating how efficiently a company uses its assets to generate sales.

Step-by-step explanation:

The amount of sales dollars generated per dollar of invested capital is referred to as Asset Turnover. This financial ratio measures how efficiently a company uses its assets to generate sales. It is computed by dividing net sales by average total assets. A higher asset turnover indicates better performance in generating revenue from the capital employed. In contrast, profit margin, operating income ratio, and equity multiplier measure different aspects of a company's profitability and financial leverage.