finance

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The Asset Turnover Ratio Student’s Name: Institutional Affiliation: Abstract The asset turnover is a concept that explains the total assets in relation to the total sales held by a firm. The asset turnover concept basically explains the reason that a certain amount of sales is generated by a certain proportion of assets. This ratio is an example of an efficiency ratio which shows how efficiently a firm operates on the premise of the number of sales or business that are generated. The asset turnover concept is represented by a ratio which is percentage form computed as net sales divided by the total value of assets as indicated in the balance sheet or statement of a company’s financial position. The asset turnover ratio is represented by each dollar any other unit currency as a measure of the assets and the subsequent resulting change in sales value. It must be noted that the net sales referred to are the sales excluding the refunds or sales returns that may be offered by a business. The net assets may be the total assets or the average assets which are opening assets plus the closing assets divided by two to yield the average value (Accounting Course, 2018). Keywords: Asset Turnover, Net Assets, Average Net Value, Fixed Assets, Financial Success, Operational Capacity. The Asset Turnover Ratio The Importance of the Asset Turnover Ratio and Concept The asset turnover ratio is a measure of how efficiently a firm operates with regard to the sales level and asset level. The ratio explains how a company can utilize assets to generate the given sales revenue. The asset turnover ratio is, therefore, a fundamental ratio indicator for efficient profitable firms and

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