Asset Turnover

A measure of how productively a firm is using its assets. The asset turnover ratio takes on key item from the profit and loss statement (sales or revenue), and one key item from the balance sheet (total assets). Asset turnover is computed as total sales or revenue divided by total assets. If for example, a firm has $100,000 in sales and $25,000 in assets, then its asset turnover is 4.0. This means that for each dollar of assets, the firm generates $4 in sales or revenue. Firms generally strive for high asset turnover. Asset turnover is one of the ratios used in the Dupont Model of financial performance.