Asset Turnover Ratio

Definition: The amount of sales generated for every dollar’s worth of assets. It is calculated by dividing sales in dollars by assets in dollars.

Formula:

Asset Turnover = Revenue / Assets

Also known as the Asset to Turnover Ratio.
More Detail: Asset turnover measures a firm’s efficiency at using its assets in generating sales or revenue – the higher the number the better. It also indicates pricing strategy: companies with low profit margins tend to have high asset turnover, while those with high profit margins have low asset turnover.