Asset Turnover Ratio Formula - Definition - Formula - Example - Interpretation - Importance
Here we will study about Asset Turnover Ratio Formula, Definition, Interpretation and finally its Importance in Accounting. Asset Turnover Ratio Definition Asset Turnover Ratio shows the efficiency of management in utilizing the assets of the company in generating revenues for the business. You may also be interested in Return On Assets Now we need to understand What is Asset Turnover Ratio Formula? It is the ratio which is obtained by dividing the Net Sales By Average Total Assets. Mathematically, we can write as: Assets Turnover Ratio = Net Sales / Average Total Assets Here Average Total Assets is = Opening Assets + Closing Assets / 2 Example: If the Net Sales From Income Statement is Rs. 60000, Opening Assets is Rs. 500000 and Closing Assets is Rs. 700000, then Assets Turnover Ratio can be calculated from the above Formula as: Assets Turnover Ratio = 600000 / 600000 = .1 Her...