Total Assets Turnover Rate – Formula and Analysis

Within the group of activity ratios, the total assets turnover rate is the broadest in scope. Similar to other activity ratios, it utilizes net sales as the numerator. However the denominator doesn’t focus in on a single balance sheet asset group like the working capital turnover or fixed assets turnover rates, it includes all assets. This means all other assets (non-current and intangible assets).                                                                                   

The total assets turnover rate is really an all-encompassing blanket activity ratio. The other activity ratios have parameters and are more beneficial especially to businesses that depend heavily on its sales from that particular asset group.  As an example, retail relies more on inventory than fixed assets. Some companies rely distinctly on unique assets for their sales. Here are some examples:

© 2017 – 2022, David J Hoare MSA. All rights reserved.

error: Content is protected !!