Series 79: 3.4.1. Asset Turnover Ratio

3.4.1. Asset Turnover Ratio

A company’s asset turnover ratio measures its ability to use its assets to generate revenues. The ratio is usually expressed in dollars and indicates how much revenue is produced in a given time period (typically a year) for every dollar of assets a company owns. If a company has a high asset turnover ratio for its industry, this fact suggests the company is deploying its assets relatively efficiently.

To calculate the asset turnover ratio, you must first calculate the average total assets for the period. To do