The-definition.com

Definition

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.

Share it:  Cite

More from this Section

  • Bond certificate
    Bond certificate is a legal document that indicates the name of the issuer, the face value ...
  • Bonds
    Bonds are a form of interest-bearing notes payable issued by corporations, universities, ...
  • Secured bonds
    Secured bonds have specific assets of the issuer pledged as collateral for the bonds. A ...
  • Direct material quantity standard
    The direct material quantity standard is the quantity of direct materials that should ...
  • Reversing entry
    Reversing entry is an entry, made at the beginning of the next accounting period that ...