Total assets turnover is the ratio to measure how good a company’s assets are performing in order to generate revenues. The asset turnover ratio measures the number of times the sales is of total assets. The higher the asset turnover ratio is the better the company is managing its assets.
The formula for assets turnover is:
Total Assets turnover = Sales Revenue / Total Assets
Assume a company has total assets of $500,000 and its total sales revenues are $3,000,000. This means the total asset turnover is 6 times.
Total Assets turnover = $3,000,000/ $500,000 = 6 Times
This means that the company is managing its assets efficiently to generate sales.
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