The asset turnover ratio is a financial metric that measures the efficiency of a company's ability to generate sales from its assets. It is calculated by dividing revenue by average total assets.A higher asset turnover ratio indicates that a company is more efficient at using its assets to generate sales.Conversely, a lower ratio suggests inefficiency and indicates that a significant amount of assets are lying idle or are underutilized.
Learn Asset Turnover with interactive examples and practice exercises in our Performance Metrics module.
This interactive learning module helps you understand Asset Turnover through hands-on practice and real-world examples.