What is an Asset Turnover?
One of the easy ways to get an idea of how efficiently a company is using the resources on hand is to take a look at the ratio of asset turnover. Essentially, asset turnover is determined by dividing the current total worth of the company’s assets by the amount of net sales generated within a given period of time. This calculation will provide some insight into whether there needs to be some changes in the sales and marketing strategies of the company, as well as indicate that a new marketing program is beginning to build momentum. The concept of taking total assets and dividing by the net revenue generated by sales is not a new idea. In fact, businesses have used this simple formula for decades. Understanding total asset turnover will work for any type of business, whether the company is a home based business or an international conglomerate. Every company has assets of some sort, and every company produces goods and services for sale to a consumer market. The asset turnover can be ve
