If a company's asset turnover is computed as sales divided by total assets, and the value is 0.25, what is the asset turnover?

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Multiple Choice

If a company's asset turnover is computed as sales divided by total assets, and the value is 0.25, what is the asset turnover?

Asset turnover is sales divided by total assets. If the value given is 0.25, that is the asset turnover itself: the company generates 25 cents of sales for every dollar of assets (or $25 in sales per $100 of assets). Among the options, 0.25 matches exactly. The other numbers would imply different levels of efficiency, e.g., 0.125 means 12.5 cents per dollar, 0.50 means 50 cents per dollar, and 1.00 means $1 of sales per $1 of assets.

Asset turnover is sales divided by total assets. If the value given is 0.25, that is the asset turnover itself: the company generates 25 cents of sales for every dollar of assets (or $25 in sales per $100 of assets). Among the options, 0.25 matches exactly. The other numbers would imply different levels of efficiency, e.g., 0.125 means 12.5 cents per dollar, 0.50 means 50 cents per dollar, and 1.00 means $1 of sales per $1 of assets.

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