what is the asset turnover ratio
How it works/Example: The formula for the asset turnover ratio is: Revenue / Average Total Assets. Let's look at an example using the following hypothetical information for Company ABC: Revenue is found on the income statement, and total assets are found on the balance sheet. Using the asset turnover ratio formula and the information above, we can calculate that Company ABC's asset turnover ratio this year was: $1,500,000 / [($975,000 + $1,140,000)/2] = 1.418. #-ad_banner-#This means that for every dollar of Company ABC's assets, Company ABC generated $1.42 in revenue.