Final answer:
The ratio of sales to assets is measured using the Asset Turnover Ratio, which is calculated by dividing total sales by average total assets. It reflects how efficiently a company uses its assets to generate sales, unlike measures of market competition such as the four-firm concentration ratio and the Herfindahl-Hirschman Index (HHI).
Step-by-step explanation:
The formula used to measure the ratio of sales to assets is known as the Asset Turnover Ratio. This ratio is calculated by dividing total sales or revenue by the average total assets to measure how efficiently a company uses its assets to generate sales. The formula is: Asset Turnover Ratio = Total Sales / Average Total Assets.
For example, if a company has total sales of $200,000 and its average total assets are $100,000, the Asset Turnover Ratio would be 2. This means that for every dollar invested in assets, the company generates $2 in sales.
In contrast to the Asset Turnover Ratio, the four-firm concentration ratio and the Herfindahl-Hirschman Index (HHI) measure the extent of competition in a market, not sales efficiency.