Explanation

The total asset turnover ratio is calculated as:

Total Asset Turnover = Revenue / Average Total Assets

We are given:

• Revenue = €20 million
• ROA (Return on Assets) = 4%
• ROE (Return on Equity) = 10%
• Average Shareholders' Equity = €10 million

First, we need to find Average Total Assets. We can use the ROA formula:

ROA = Net Income / Average Total Assets

We don't have Net Income directly, but we can find it using ROE:

ROE = Net Income / Average Shareholders' Equity

So: Net Income = ROE × Average Shareholders' Equity = 10% × €10 million = €1 million

Now we can find Average Total Assets using ROA:

ROA = Net Income / Average Total Assets 4% = €1 million / Average Total Assets Average Total Assets = €1 million / 0.04 = €25 million

Now calculate Total Asset Turnover:

Total Asset Turnover = Revenue / Average Total Assets = €20 million / €25 million = 0.80

Therefore, the correct answer is A. 0.80.

Verification:

• ROA = Net Income / Total Assets = 1/25 = 4% ✓
• ROE = Net Income / Equity = 1/10 = 10% ✓
• Total Asset Turnover = Revenue / Total Assets = 20/25 = 0.80 ✓