How to judge efficiency

The asset turnover ratio is a metric that is designed to measure the quantum of the revenue made by a company in relation to its total assets. It's calculated by taking the total sales and dividing it by the amount of assets. The value of assets can either be the closing value as disclosed every year or the average calculated by using the opening and closing values. More sophisticated investors could also consider using a time-weighted average if there are substantial variations in a company's asset base during the relevant period. Given that capital is scarce, investors need a quick and easy-to-use ratio to understand how efficiently a company uses its capital. The asset turnover ratio fulfils on

This article was originally published on April 01, 2022.