Asset turnover
Principles of Finance glossary · Financial Statements, Markets & Working Capital
Definition
Revenue divided by average total assets; a measure of asset productivity.
Asset turnover in plain English
Asset turnover answers a simple question: for every dollar of stuff a company owns, how many dollars of sales does it squeeze out? You calculate it as revenue divided by the company's average total assets, so a turnover of 2 means each dollar of assets generated $2 in sales. A busy food truck that rings up huge sales from one cheap cart has high asset turnover; a giant factory that owns tons of expensive machinery but sells modestly has low turnover. It's a productivity scorecard — higher generally means the company is using what it owns efficiently, though what counts as 'good' varies a lot by industry.
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