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Total asset turnover measures

  • A.assets employed per unit of equity
  • B.the rate at which assets are depreciated
  • C.revenue generated per unit of assets employed
  • D.profit generated per unit of assets employed

Answer: C

It shows how intensively the asset base is being used, and it differs enormously between a retailer and a steelworks. Multiplying it by the profit margin gives the return on assets, which is the beginning of the DuPont decomposition.

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