# Asset Turnover Ratio

The** asset turnover ratio** analyzes the productivity of a company’s assets. It tells us how many dollars of sales a company generates for each dollar invested in assets. This ratio is computed by dividing net sales by average total assets for the period.

** Net sales÷average assets = Asset turnover ratio**

**Asset turnover **measures how efficiently a company uses its assets to generate sales. Unless seasonal factors are significant, we can use the beginning and ending balance of total assets to determine average total assets.