![]() The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. The cookie is used to store the user consent for the cookies in the category "Performance". This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other. ![]() Net sales, found on the income statement, are used to calculate this. This cookie is set by GDPR Cookie Consent plugin. The asset turnover ratio is calculated by dividing net sales by average total assets. The cookies is used to store the user consent for the cookies in the category "Necessary". The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional". The cookie is used to store the user consent for the cookies in the category "Analytics". ![]() These cookies ensure basic functionalities and security features of the website, anonymously. Necessary cookies are absolutely essential for the website to function properly. In the case of a lower value, you can probably assume that the business you’re analyzing isn’t being managed very effectively, or that it’s experiencing manufacturing or production difficulties that are impacting sales.Īs with many other efficiency ratios, it’s important to remember that there are varying industry standards for the asset turnover value.įor this reason, you should always make a point of comparing your results with other companies in the same industry. When the ratio value is very low, on the other hand, it tells you that a business has a lot of money invested in assets, but isn’t seeing a huge return on those assets in terms of revenue. When the ratio result is relatively high, it tells you that a company is using its resources in the most efficient manner possible to produce income. Generally speaking, a higher ratio is a more desirable outcome for most businesses. Okay now let's find out how the total asset turnover is used to evaluate a company's efficiency.Ī ratio of 1, or 100%, means that a firm is generating a dollar in sales for every dollar in assets that it owns.
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