Asset Turnover Ratio Calculator

How it works

Average total assets = (start-of-year assets + end-of-year assets) ÷ 2 · asset turnover = revenue ÷ average total assets · fixed asset turnover = revenue ÷ average net fixed assets · days = 365 ÷ asset turnover

Asset turnover shows how efficiently a company uses everything it owns to generate sales. It is one of the three parts of the DuPont formula (ROE = profit margin × asset turnover × equity multiplier), so a business can earn a good return either with high margins and low turnover, like a utility, or with thin margins and high turnover, like a supermarket. Compare it only within an industry and over time; a rising ratio usually means better use of assets, though it can also mean the company is under-investing.

Worked example

Revenue of 5,000,000 with total assets of 3,800,000 at the start and 4,200,000 at the end of the year gives average assets of 4,000,000. Asset turnover = 5,000,000 ÷ 4,000,000 = 1.25, so each 1.00 of assets produced 1.25 of sales, and the company turns over its assets about every 292 days. Fixed asset turnover is 5,000,000 ÷ 2,000,000 = 2.50.

Sources: Investopedia — Asset Turnover Ratio · Corporate Finance Institute — Asset Turnover Ratio

Frequently asked questions