Which of the following metrics can help assess the efficiency of asset utilization?

Total Asset Turnover is an essential metric for evaluating the efficiency with which a company utilizes its assets to generate sales. It is calculated by dividing a company’s total sales by its average total assets. A higher total asset turnover ratio indicates that the company is generating more revenue per dollar of assets, signifying effective asset management and utilization.

This metric directly relates to asset efficiency as it shows how well the company is using its assets to produce sales. The goal in corporate finance is often to maximize efficiency and generate the highest returns from the resources available. Companies with high total asset turnover ratios are typically seen as more efficient in utilizing their resources compared to those with lower ratios.

Other options, while related to financial performance, do not directly measure asset utilization efficiency in the same manner. For example, profit margin reflects a company's profitability relative to its sales but does not provide insight into how effectively it uses its assets. Days' Sales in Receivables gauges how quickly the company can collect cash from credit sales, offering insights into liquidity but not asset efficiency as a whole. Account Payable Turnover focuses on how well a company manages its payables, which is more about liabilities than asset utilization.

By concentrating on the total asset turnover, you capture the core measure of how