Total Asset Turnover
Total asset turnover is a financial ratio that measures the efficiency of a company’s use of its assets in generating sales or revenue. It is calculated by dividing a company’s total sales or revenues by its total assets. A higher total asset turnover ratio indicates that a company is using its assets more efficiently to generate sales or revenue.
History of Total Asset Turnover
Total asset turnover is a financial ratio that has been used by investors and analysts for many years. It was first developed in the early 20th century by financial analysts who wanted to measure the efficiency of a company’s use of its assets. Since then, it has become a widely used financial ratio that is used to evaluate a company’s performance and financial health.
Total asset turnover is a key indicator of a company’s ability to generate sales or revenue from its assets. It is also used to compare a company’s performance to that of its competitors. By comparing a company’s total asset turnover ratio to that of its competitors, investors and analysts can get a better understanding of how efficiently a company is using its assets.
Table of Comparisons
| Company | Total Assets | Total Sales/Revenue | Total Asset Turnover |
|---|---|---|---|
| Company A | $100,000 | $500,000 | 5.00 |
| Company B | $200,000 | $500,000 | 2.50 |
Summary
Total asset turnover is a financial ratio that measures the efficiency of a company’s use of its assets in generating sales or revenue. It is calculated by dividing a company’s total sales or revenues by its total assets. A higher total asset turnover ratio indicates that a company is using its assets more efficiently to generate sales or revenue. Investors and analysts use this ratio to compare a company’s performance to that of its competitors and to get a better understanding of how efficiently a company is using its assets.
For more information about total asset turnover, investors and analysts can visit websites such as Investopedia, The Balance, and Morningstar.
See Also
- Return on Assets
- Asset Utilization Ratio
- Inventory Turnover
- Accounts Receivable Turnover
- Fixed Asset Turnover
- Debt to Equity Ratio
- Current Ratio
- Quick Ratio
- Cash Ratio
- Gross Profit Margin
