The Asset Turnover Ratio is calculated using which formula?

The Asset Turnover Ratio is a financial metric that measures the efficiency of a company's use of its assets to generate sales revenue. It is calculated using the formula where sales revenue is divided by the total assets of the company. This ratio indicates how well a company is utilizing its assets to produce revenue, providing insight into operational efficiency.

Using sales as the numerator highlights the total income generated from the use of assets, while total assets in the denominator shows the resources available to the company. A higher ratio suggests a more efficient use of assets, essentially indicating that the company can generate more sales per dollar of assets.

This is why the choice that incorporates sales over total assets is the correct formula for the Asset Turnover Ratio. The other options focus on different financial aspects and metrics that do not relate directly to measuring the efficiency of asset utilization in generating sales.