Final answer:
Asset turnover is a financial ratio that measures revenue generated per dollar of assets, indicating a company's efficiency in using its assets to generate sales.
Step-by-step explanation:
The "Asset turnover" measures the sales revenue generated per dollar of assets. It is a financial ratio that helps evaluate a company's efficiency in using its assets to generate sales. The formula for calculating asset turnover is:
Asset Turnover = Net Sales / Average Total Assets
For example, if a company has net sales of $10 million and average total assets of $5 million, the asset turnover ratio would be 2. This means that the company generates $2 of sales revenue for every $1 of assets.
The "Asset turnover" is a financial ratio that measures the sales revenue generated per dollar of assets. It indicates how effectively a company is using its assets to generate sales. To calculate asset turnover, you divide the company's net sales by its average total assets.
For example, if a company has net sales of $500,000 and average total assets of $1,000,000, the asset turnover ratio would be 0.5. This means that for every dollar of assets, the company generates 50 cents in sales revenue. A higher asset turnover ratio suggests that the company is efficiently using its assets to produce sales, while a lower ratio may indicate inefficiency.