Asset turnover ratio


Total asset turnover (TAT) - asset management efficiency ratio. It is defined as the quotient of sales to total assets.

W = S A {\displaystyle W={S \over A}}

where:

The asset turnover ratio allows you to assess the profitability of an enterprise's assets, ie to assess the extent to which they contribute to generating revenue from sales. Its size depends, among other things. of:

As a rule, the higher the value of the index, the better. It should refer to industry size. It is important to remember that typically low-margin companies (relatively high profit margins) have a relatively high asset turnover ratio, and among those with a high profit margin, asset turnover is relatively lower. Bibliography

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