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.
Category: Accounting & Auditing
Previous: ← Research & development costs
Next: Notes payable →
More from this Section
- Free cash flow
Free cash flow means cash provided by operating activities adjusted for capital expenditures ... - Principles of internal control
The principles of internal control are: establishment of responsibility; segregation ... - Book-keeping
Book-keeping is the art of recording the transactions on the books of original ... - Research & development costs
Research and development costs are expenditures that may lead to patents, copyrights, ... - Other expenses and losses
A non operating activities section of the income statement that shows expense from auxiliary ...