Asset turnover ratio: It is a type of an efficiency ratio which measures the ability of an entity to generate sales from its assets by making a comparison of the net sales with average of total assets. This ratio basically helps to understand how the company makes the use of assets appropriately to generate its sales. Return on assets: This ratio helps the company to find the percentage of profit in relation to its overall resources available. It can be calculated by dividing the net income and total assets. To determine the relationship of the asset turnover to the return on assets.

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Chapter 24, Problem 26Q

To determine

Asset turnover ratio: It is a type of an efficiency ratio which measures the ability of an entity to generate sales from its assets by making a comparison of the net sales with average of total assets. This ratio basically helps to understand how the company makes the use of assets appropriately to generate its sales.

Return on assets: This ratio helps the company to find the percentage of profit in relation to its overall resources available. It can be calculated by dividing the net income and total assets.

To determine the relationship of the asset turnover to the return on assets.

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