Question

Kelso's Pharmacy generates $2 in sales for every $1 the firm has invested in total assets. Which one of the following ratios would reflect this relationship?

a. Return on equity
b. Quick ratio
c. Debt-to-equity ratio
d. Asset turnover ratio

Answer 1

The ratio that reflects the relationship between sales generated and total assets invested for Kelso's Pharmacy is the asset turnover ratio, which is answer choice d.

Step-by-step explanation:

The relationship between the sales generated and the total assets invested is represented by the asset turnover ratio. This ratio is calculated by dividing the sales or revenue of a company by its total assets. Given that Kelso's Pharmacy generates $2 in sales for every $1 invested in total assets, the ratio that would reflect this relationship is the asset turnover ratio. Therefore, the correct answer is d. Asset turnover ratio.