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Definition of Asset Turnover Ratio


Asset turnover ratio used to measure the ability of the company to generate the sales from assets of the company. It can beĀ calculated by comparing net sales with average total assets.

Investors use this ratio to find how efficiently a company uses its assets to generate sales.

Definition of Asset Turnover Ratio


Total Asset Turnover ratio calculates the net sale of the company as a percentage of assets in order to show that, from each dollar of the company how much sales generate.

For example, if the result of the ratio is .7 its means that from each dollar company generate 70 cents of sales.

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