What does a company's turnover ratio indicate?

A company's turnover ratio provides critical insights into how effectively it is using its assets to generate sales. This ratio typically measures the relationship between sales and the average total assets of the company, indicating how efficiently a company can convert its assets into revenue.

A higher turnover ratio suggests that the company is using its assets more effectively to produce sales, whereas a lower ratio may indicate inefficiencies in asset utilization. An effective asset management strategy can significantly enhance a company's profitability and overall financial performance.

The other options address different aspects of financial performance or management. For instance, the speed at which liabilities are settled pertains more to liquidity ratios, while inventory turnover specifically measures how frequently inventory is sold and replaced, focusing solely on inventory management. Lastly, the aspect of repaying debts relates to solvency and leverage ratios, which are distinct from turnover ratios entirely.