Question

What does a low asset turnover compared to the industry imply? The investment in assets may be too high. Sales are higher than average. The investment in assets is too low. Net income is low relative to the investment in assets.

Answer 1

Answer:

A low asset turnover compared to the industry implies Net income is low relative to the investment in assets.

Explanation:

Asset turnover is the ratio of total sales or revenue to average assets. It is a measure used to gauge how effectively companies are using their assets to generate sales.

Higher turnover ratios mean the company is using its assets more efficiently. Lower ratios mean that the company isn't using its assets efficiently and most likely have management or production problems.

The asset turnover ratio measures the value of a company's sales or revenues relative to the value of its assets

If a company has a low asset turnover ratio, it indicates it is not efficiently using its assets to generate sales.