Financial Terms / total asset turnover

# Understanding Total Asset Turnover

Total asset turnover is a useful tool for evaluating a company's performance as it compares their sales to their total assets to measure how efficiently they produce sales.

## Formula

``Total Asset Turnover = Total Sales / Total Assets``

## How do I calculate the total asset turnover?

`The Total Asset Turnover ratio is an important measure of a company's efficiency. To calculate it, The formula is: `Total Asset Turnover = Total Sales / Total Assets`. This ratio gives a sense of how much revenue each dollar of assets is generating. For example, if a company's Net Sales are \$100 and its Average Total Assets are \$50, then its Total Asset Turnover ratio would be 2.0. This means that the company is generating \$2.00 in revenue for every dollar of assets. It is important to note that the Total Asset Turnover ratio can vary greatly by industry, so it is important to compare a company's ratio to others in its industry to get an accurate assessment of performance. Software tools such as Sourcetable can be used to calculate the Total Asset Turnover ratio.`

## What is Total Asset Turnover?

`Total Asset Turnover is a measure of a company's efficiency in using its assets to generate revenue. It is calculated by dividing a company's total sales or revenues by its total assets.`

## What is a Good Total Asset Turnover Ratio?

`The ideal Total Asset Turnover ratio varies from industry to industry, but a ratio of 1.5 or higher is generally considered good.`

## How is Total Asset Turnover Used?

`Total Asset Turnover is a useful metric for comparing a company's performance against its peers in the same industry. It is also used to evaluate a company's ability to use its assets efficiently to generate revenue.`

## How Often is Total Asset Turnover Calculated?

`Total Asset Turnover is typically calculated on an annual basis.`

## Key Points

How do I calculate total asset turnover?
`Total Asset Turnover = Total Sales / Total Assets`
The Asset Turnover Ratio Measures Efficiency
The asset turnover ratio is a measure of how efficiently a company can use its assets to generate revenue. It compares the dollar amount of sales or revenues to the company's total assets.
Calculated Each Year
The asset turnover ratio is calculated each year to determine the efficiency of the company's assets.
Fixed Asset Analysis
The asset turnover ratio can be modified to analyze only the fixed assets of a company, such as buildings and machines.
Higher Ratios Indicate Efficiency
Companies with a higher asset turnover ratio are more effective in generating revenues from their assets. This is because they are able to generate more sales from the same amount of assets.
Industry Specific
The asset turnover ratio is specific to an industry, meaning that different industries will have different ratios depending on their asset structures.