To increase total asset turnover, management must either increase sales or reduce total stockholders' equity. A. TrueB. False

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Business

Stevens

13 January, 09:59

To increase total asset turnover, management must either increase sales or reduce total stockholders' equity. A. TrueB. False

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Brooks Stephenson · Answer 1

FALSE

Explanation:

Remember, total asset turnover is calculated using a ratio that measures how the management was able to use its assets to efficiently increase sales. Usually the total asset turnover is gotten by dividing a company's sales by its total assets.

To increase sales, management should continue to use its existing assets (not making purchase of any new asset), and at the same time reducing their purchases of inventory.