Asset Turnover Ratio

Asset turnover ratio, abbreviated as ATR, also called total asset turnover ratio, is used to measure a company's efficiency in generating sales revenue from its assets.  It indicates how well a company is utilizing its assets to generate sales.

A higher asset turnover ratio indicates that a company is more efficient in utilizing its assets to generate sales revenue.  Conversely, a lower ratio suggests that the company may not be using its assets effectively to drive sales.

It's important to note that the interpretation of the asset turnover ratio can vary across industries, as different industries may have different asset structures and sales models.  Comparing the asset turnover ratio of a company to its industry peers or historical performance can provide valuable insights into its operational efficiency and asset management strategies

 

asset turnover ratio Formula

\( ATR =  R \;/\; ATA \)

Symbol

\( ATR \) = asset turnover ratio

\( R \) = revenue

\( ATA \) = average total asset

 

asset turnover ratio Formula

\( ATR =  R \;/\; (AS + AE \;/\; 2 ) \)

Symbol

\( ATR \) = asset turnover ratio

\( R \) = revenue

\( AS \) = asset at start of year

\( AE \) = asset at end of year