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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. 

Dupont Analysis - Investopedia

DuPont analysis is a useful technique used to decompose the different drivers of return on equity (ROE). Decomposition of ROE allows investors to focus on the key metrics of financial performance individually to identify strengths and weaknesses.

DuPont Analysis Explained

This video takes you through the financial ratios of the ROE formula, the ROA formula, the ROS formula, asset turnover and leverage, and shows how they fit together. The very basics and the very essence of financial ratio analysis!

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