Asset turnover ratio is a financial ratio that measures a company’s efficiency in generating sales from its assets. The ratio is calculated by dividing the company’s net sales by its average total assets. The higher the asset turnover ratio, the more efficient a company is at generating sales from its assets. A low asset turnover ratio may indicate that a company is not using its assets effectively to generate revenue.
Asset turnover ratio is an important measure of a company’s operational efficiency, as it shows how well a company is utilizing its assets to generate revenue. It can also be used to compare a company’s performance to that of its competitors or to industry benchmarks. A higher asset turnover ratio can indicate that a company is more productive and efficient than its peers, while a lower ratio may suggest that a company is underutilizing its assets or may have operational inefficiencies that need to be addressed. Overall, asset turnover ratio is a valuable metric that helps investors and analysts to evaluate a company’s financial performance and efficiency.
What is asset turnover ratio formula?
What is a good ratio for asset turnover?
Why is asset turnover ratio important for businesses and investors?
Is it better to have a higher or lower asset turnover?