What Is Asset Turnover?

by Greg DePersio

0 min read

Asset turnover is expressed as a ratio and is calculated by dividing the revenue of a business by its total assets. This ratio indicates how well a business is generating revenue from its assets. For example, a business with an asset turnover ratio of 2.5 can generate $2.50 of revenue from each dollar of its assets.

Some industries tend to have a higher asset turnover ratio than others. For example, businesses in the utilities industry typically have lower asset turnover ratios than businesses in the retail industry. When you try to determine how well a business is performing, you get a better result when you compare its asset turnover ratio with a business in the same industry.

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