How to Calculate Asset Turnover
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- เผยแพร่เมื่อ 5 ก.ย. 2024
- This video shows how to calculate and interpret a company's Asset Turnover. The Asset Turnover is computed as follows:
Asset Turnover = Net Sales / Average Total Assets
Thus, a company with Net Sales of $100,000 and Average Total Assets of $25,000 would have an Asset Turnover of 4. This means the company generated four dollars in sales for every dollar of assets.
The Asset Turnover shows how good a company is at generating sales, given the assets it has. What is a good or bad Asset Turnover depends on the industry. A grocery store would probably have a higher Asset Turnover than a car dealership that sells luxury vehicles.-
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This comparison between 2 different industries was really good. So a low profit margin is not always a bad thing if it can be more than compensated by the huge number of sales volume.
That is absolutely correct. Grocery stores typically have low profit margins but can increase their ROA by increasing their asset turnover. You could thus view asset turnover as a measure of sales efficiency.
Hello, I love your videos and the work you do posting them, I find them very useful.
explained so simple thanks so much
No problem!
Nice explanation!
Very good
Very helpful.
if you have just one year of the total assets, even though you have to dive by 2, the total assets?
good video but misleading title. havent really explained the asset turnover part as i was hoping for
Turnover ratio result determines how efficient is a company in utilizing its fixed asset ..why would u miss such major point ?????
He had already mentioned this in his previous videos.