The efficiency with which a firm uses all its assets can be determined by analyzing what ratio?

The total asset turnover ratio is a key indicator of the efficiency with which a firm utilizes its assets to generate sales. This ratio measures how effectively the firm converts its total assets into revenue, reflecting the firm's operational efficiency. A higher total asset turnover ratio suggests that the company is using its assets more efficiently to produce sales, which can lead to stronger financial performance.

The calculation of this ratio involves dividing the company's total sales or revenue by its average total assets. This gives insight into how well the firm is leveraging its asset base to drive sales growth. Firms with a high total asset turnover ratio are typically able to generate more revenue per dollar invested in assets, signaling good management and effective asset utilization.

In contrast, ratios such as the debt-to-equity ratio primarily assess financial leverage and capital structure, the average payment period focuses on a firm's short-term liquidity and payment practices, and the coverage ratio evaluates a company's ability to meet its debt obligations, none of which directly address asset utilization effectiveness. Thus, the total asset turnover ratio is specifically designed to gauge the efficiency of asset usage, making it the correct choice for this question.