The Total Asset Turnover Ratio is a financial indicator that measures how efficiently a company uses its assets to generate revenue. It is determined by dividing the company's net sales by the average total assets over a defined period.

This ratio reflects the amount of revenue a company is capable of generating for every dollar of assets it owns. A higher total asset turnover ratio indicates more efficient use of assets to drive sales. For example, a ratio of 2.0 means the company produces $2 in revenue for each $1 invested in assets.

A lower ratio could indicate that the company has too many assets that are not being used efficiently, which might suggest potential inefficiencies in asset management. Conversely, a very high ratio might indicate that the company is operating with minimal assets, which could be risky if it doesn't have enough resources to sustain its operations.

The Total Asset Turnover Ratio is particularly useful for comparing companies within the same industry, as asset intensity and revenue generation capabilities can vary significantly across different sectors. It helps investors and analysts gauge the operational efficiency and asset utilization of a company.

Z rozdziału 4:

article

Now Playing

4.21 : Activity Ratios: Total Asset Turnover Ratio

Financial Ratio Analysis

23 Wyświetleń

article

4.1 : Meaning of Ratios

Financial Ratio Analysis

58 Wyświetleń

article

4.2 : Types of Ratios

Financial Ratio Analysis

49 Wyświetleń

article

4.3 : Importance of Ratio Analysis

Financial Ratio Analysis

51 Wyświetleń

article

4.4 : Liquidity Ratios

Financial Ratio Analysis

42 Wyświetleń

article

4.5 : Liquidity Ratios: Current Ratio

Financial Ratio Analysis

35 Wyświetleń

article

4.6 : Liquidity Ratios: Quick Ratio

Financial Ratio Analysis

29 Wyświetleń

article

4.7 : Liquidity Ratios: Liquid Ratio

Financial Ratio Analysis

37 Wyświetleń

article

4.8 : Profitability Ratios

Financial Ratio Analysis

35 Wyświetleń

article

4.9 : Profitability Ratios: Gross Profit Ratio

Financial Ratio Analysis

30 Wyświetleń

article

4.10 : Profitability Ratios: Net Profit Ratio

Financial Ratio Analysis

28 Wyświetleń

article

4.11 : Profitability Ratios: Return on Equity

Financial Ratio Analysis

23 Wyświetleń

article

4.12 : Profitability Ratios: Return on Asset

Financial Ratio Analysis

18 Wyświetleń

article

4.13 : Profitability Ratios: Return on Capital Employed

Financial Ratio Analysis

34 Wyświetleń

article

4.14 : Profitability Ratios: Earnings per Share

Financial Ratio Analysis

11 Wyświetleń

See More

JoVE Logo

Prywatność

Warunki Korzystania

Zasady

Badania

Edukacja

O JoVE

Copyright © 2025 MyJoVE Corporation. Wszelkie prawa zastrzeżone