Final answer:
Total asset turnover indicates the firm's efficiency in utilizing its assets to generate revenue. A higher total asset turnover ratio is generally seen as a positive indicator of efficiency.
Step-by-step explanation:
Total asset turnover indicates the firm's efficiency in utilizing its assets to generate revenue. It is calculated by dividing the firm's total revenue by its average total assets. A higher total asset turnover ratio indicates that the firm is generating more revenue with its assets, which is generally seen as a positive indicator of efficiency. For example, if a firm has a total revenue of $1 million and average total assets of $500,000, the total asset turnover ratio would be 2 ($1 million divided by $500,000). This means that the firm generates $2 of revenue for every $1 of assets it possesses.