Which metric indicates how efficiently assets generate revenue?

• A. Current ratio
• B. Debt-service coverage
• C. Asset turnover
• D. Quick ratio

Answer: (C)

Asset turnover shows how efficiently an organization uses its assets to generate revenue. It’s calculated as revenue divided by average total assets, so a higher ratio means more revenue is produced per dollar of assets, signaling better utilization of property, plants, and equipment. In healthcare, this reflects how well the hospital’s assets are supporting patient care and revenue generation. The other metrics focus on liquidity or debt capacity rather than asset efficiency: current ratio and quick ratio measure short-term ability to cover liabilities, and debt-service coverage assesses whether operating cash flow can meet debt payments. So the metric that best indicates how efficiently assets generate revenue is asset turnover.