Assets turnover


Assets turnover

Assets turnover is a business term and may be used as a broad measure of asset efficiency and is calculated by dividing sales revenue by the total assets.

Its also used in the Du Pont Identity:

Net Earnings/Shareholders Eq. = Net Earnings/Sales(Income) * Sales(Income) / Total Assets * Total Assets / Shareholders Eq.

In which::Net Earnings/Sales(Income) is known as NET MARGIN:Sales(Income)/Total Assets is known as ASSETS TURNOVER:Total Assets/Shareholders Eq. is known as LEVERAGE

The net margin is a summary indicator of an income statement, Asset turnover is an indicator of the left side of the balance sheet (total assets’ side) and Leverage is an indicator of the right side of the Balance Sheet (liabilities and shareholders’ equity’ side).

The Du Pont Identity helps many companies or individuals, visualize and comprehend the analysis of a financial statement or annual report of a company, in return on assets and return on investments.

ee also

*Inventory Turnover


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Look at other dictionaries:

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