total asset turnover

Net sales divided by average total net assets. The resulting number shows how often assets turn over, which can indicate how effectively a company is managing all of its assets. The number by itself isn’t informative, it must be compared to other companies in the industry, as well as to the company’s historical data. If the asset turnover is high relative to other companies in the industry, it may indicate that too few assets for potential sales are being used or suggest that the company is using too many old and fully depreciated assets. A low asset turnover can indicate that capital is tied up in too many assets relative to what is needed.