Asset turnover
Encyclopedia
Asset turnover is a financial ratio
that measures the efficiency of a company's use of its asset
s in generating sales revenue or sales income to the company.
Financial ratio
A financial ratio is a relative magnitude of two selected numerical values taken from an enterprise's financial statements. Often used in accounting, there are many standard ratios used to try to evaluate the overall financial condition of a corporation or other organization...
that measures the efficiency of a company's use of its asset
Asset
In financial accounting, assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset...
s in generating sales revenue or sales income to the company.
- "Sales" is the value of "Net Sales" or "Sales" from the company's income statementIncome statementIncome statement is a company's financial statement that indicates how the revenue Income statement (also referred to as profit and loss statement (P&L), statement of financial performance, earnings statement, operating statement or statement of operations) is a company's financial statement that...
- "Average Total Assets" is the average of the values of "Total assets" from the company's balance sheetBalance sheetIn financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership or a company. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A...
in the beginning and the end of the fiscal period.