Asset utilization ratios

a. relate balance sheet assets to income statement sales.

b. measure how much cash is available for reinvestment into current assets.

c. are most important to stockholders.

d. measure the firm's ability to generate a profit on sales.

Question

Business

Salvador Livingston

21 April, 06:58

Asset utilization ratios

a. relate balance sheet assets to income statement sales.

b. measure how much cash is available for reinvestment into current assets.

c. are most important to stockholders.

d. measure the firm's ability to generate a profit on sales.

+2

Answers (1)

Know the Answer?

Jamar Drake · Answer 1

a. relate balance sheet assets to income statement sales.

Explanation:

Asset utilization ratio measures the ability of a firm to generate revenue from each dollar of assets that it holds. It is computed using the following formula:

Asset Utilization = Revenue / Average Total Assets

Revenue is an income statement account, while average total assets is a balance sheet account, thus, the answer is a.

Asset utilization ratiosa. relate balance sheet assets to income statement sales.b. measure how much cash is available for reinvestment into current assets.c. are most important to stockholders.d. measure the firm's ability to generate a profit on sales.

Asset utilization ratios

a. relate balance sheet assets to income statement sales.

b. measure how much cash is available for reinvestment into current assets.

c. are most important to stockholders.

d. measure the firm's ability to generate a profit on sales.