![]() The asset turnover ratio formula is equal to net sales divided by the total or average assets of a company. If the investment made does not get translated to increase improvement in the top-line and thereby improve the bottom line, there is some problem with the decisions taken by management. The asset turnover ratio, also known as the total asset turnover ratio, measures the efficiency with which a company uses its assets to produce sales. ![]() This is because, ideally, a company wants to maximize its returns for every investment it makes. Fixed asset turnover ratio shows the amount of Revenue generated from each dollar of Fixed asset employed by the company. Higher is this figure the better is the management of the company. ![]() This means that, for every $ that the company invests in assets, it generates sales of 6.67. The total asset turnover ratio indicates the relationship between a companys net sales for a specified year to the average amount of total assets during. For example, companies in the retail industry tend to have higher asset turnover ratios than companies in the manufacturing industry because retail companies require less inventory and equipment to generate sales. Formula for intangible assets turnover ratio: net revenues from sales / intangible and legal assets. = 6.67 Times Analysis and Interpretation of ATR Advantages and Application of Ratio Analysis.
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