Question

Ratios that measure how efficiently a firm uses its assets to generate sales are known as ________ ratios.

Answer 1

Answer - asset management ratios

Reason - a business uses its assets to generate sales. Be it inventory which should be in stock to generate sales, or be it the fixed assets which maintains the required level of production. Asset management ratios help the management to give a mathematical aspect of whether the firm is effecient at current level of sales or not, and whether the firm is using its assets effeciently to generate sales.

These ratios include -

Receivables turnover ratio

Inventory turnover ratio

Fixed asset turnover ratio

Total asset turnover ratio.

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