The total assets turnover ratio (tato) is 2.37. The asset turnover ratio can be used to gauge how effectively a business uses its assets to produce income.
Total asset turnover ratio = Corp's sale / Total sales
= $38,000 / $16,000
= 2.375.
A company's sales or revenues are compared to the value of its assets using the asset turnover ratio. The asset turnover ratio can be used to gauge how effectively a business uses its assets to produce income.
The more effectively a corporation uses its assets to generate revenue, the greater its asset turnover ratio. A corporation is not effectively employing its assets to produce sales if it has a low asset turnover ratio, on the other hand.
The value of a company's assets is used as the denominator in the asset turnover ratio formula. The average asset value for the year must first be computed in order to establish the value of a company's assets.
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