ACCA Applied Knowledge · Management Accounting · Performance measurement - overview
A company has revenue of $1,200,000, operating profit of $120,000 and capital employed of $600,000. What is its asset turnover?
Asset turnover is 2.0 times, found by dividing revenue of $1,200,000 by capital employed of $600,000. It shows each dollar of capital generates two dollars of sales. It is consistent with a 10% margin giving a 20% ROCE.
- A10.0 times
- B0.5 times
- C2.0 timesCorrect
- D20.0 times
Explanation
Asset turnover = revenue / capital employed = 1,200,000 / 600,000 = 2.0 times. Check: margin 10% x turnover 2.0 = ROCE 20%, which equals 120,000/600,000. The 0.5 option inverts the ratio.
Did you get it right without looking?
One question tells you little. A timed set on Performance measurement - overview shows your real accuracy, how long you take and where you lose marks.
More Performance measurement - overview questions
- A public health clinic spent $400,000 on 8,000 patient treatments. Of these, 6,000 patients recovered fully, which was the clinic's aim. The…
- Which of the following is a weakness of using only financial measures to assess performance against organisational objectives?
- Hollis Co has set out the following measures: (1) return on capital employed, (2) percentage of customers who would recommend the firm, (3) …
- Division Q has operating profit of $90,000 and capital employed of $600,000, giving ROCE of 15%. The company's cost of capital is 12%. Q is …
- Under Kaplan and Norton's balanced scorecard, which perspective asks the question 'Can we continue to improve and create value?'
- A hospital board argues that relying only on financial indicators to assess performance can be harmful. Which of the following is the strong…