Asset turnover ratio

A ratio of sales to total asset of an entity. Assets turnover ratio represents how efficiently a company uses its assets to generate sales revenue



Formula for asset turnover ratio


                                              Sales
     Total Assets Turnover = --------------------
                                         Total Assets


EXAMPLE 

Sales of a company = $4000

Total assets = $12000


                                         $4000
                                      = ------------   =  0.333 times
                                         $12000
Interpretation 
For every dollar in assets, company  generated $0.333 in sales.