Final answer:
The asset turnover ratio reveals how many dollars of sales were produced by each dollar invested in assets.
The firm's asset turnover ratio shows the efficiency of generating sales from assets, revealing the dollars of sales per dollar of assets, which is option D.
Step-by-step explanation:
The firm's asset turnover ratio reveals how many dollars of sales were produced by each dollar invested in assets. It measures the efficiency of a firm's use of its assets to generate revenue. A higher asset turnover ratio indicates that a firm is generating more sales for each dollar invested in assets, which is generally considered favorable.
The firm's asset turnover ratio shows the efficiency of generating sales from assets, revealing the dollars of sales per dollar of assets, which is option D.
The asset turnover ratio calculates how efficiently a firm is using its assets to generate sales. It is a financial measure that shows how many dollars of sales are produced by each dollar invested in assets. Therefore, the correct answer is that the firm's asset turnover ratio reveals how many dollars of sales were produced by each dollar invested in assets, which corresponds to option D.
Total revenue is a critical factor in understanding the asset turnover ratio since it directly relates to the sales generated by the firm. To clarify, total revenue is the income a firm receives from selling its products, which can be calculated with the equation: Total Revenue = Price x Quantity. By using the assets efficiently, the firm can increase its total revenue and thus improve its asset turnover ratio.