How to Calculate Asset Turnover
What is Asset Turnover?
Asset turnover ratio measures how efficiently a company uses its total assets to generate revenue. A higher ratio indicates better asset utilisation. Asset turnover = Revenue / Average total assets.
Step-by-Step Guide
- 1Get revenue from the income statement
- 2Calculate average total assets: (start-of-year + end-of-year assets) / 2
- 3Asset turnover = Revenue / Average total assets
Worked Examples
Input
Revenue $500k · Average assets $250k
Result
Asset turnover = 2.0x
Generates $2 revenue for every $1 of assets
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