What is my asset turnover?
Enter net sales for the year and total assets at the start and end of the year. You get the total asset turnover ratio, which shows how much the company sells for each dollar of assets.
- Asset turnover
- 0.53
Net sales of $120,000.00 on average total assets of $225,000.00 give an asset turnover of 0.53.
- Average total assets
- $225,000.00
Asset turnover: 0.53. Net sales of $120,000.00 on average total assets of $225,000.00 give an asset turnover of 0.53.
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How to calculate
Computes the total asset turnover ratio: net sales ÷ average total assets.
Example with the default inputs (Net sales $120,000.00, Total assets at the start $200,000.00, Total assets at the end $250,000.00): Net sales of $120,000.00 on average total assets of $225,000.00 give an asset turnover of 0.53.
Method: Average total assets = (beginning total assets + ending total assets) ÷ 2 (ending alone when no beginning is given). Asset turnover = net sales ÷ average total assets.
- Net sales cover the year the two balance sheets start and end.
- Arithmetic is exact on the typed decimals; the ratio shows to 2 decimals, halves up.
Worked examples
Each example is checked against the calculator on every build.
- Net sales $120,000.00, Total assets at the start $200,000.00, Total assets at the end $250,000.00 gives Asset turnover 0.533333, Average total assets $225,000.00.Source: OpenStax, Principles of Finance, 6.2 Operating Efficiency Ratios (total asset turnover = net sales ÷ average total assets; Clear Lake Sporting Goods, 0.53 times). https://openstax.org/books/principles-finance/pages/6-2-operating-efficiency-ratios: 120,000 ÷ ((200,000 + 250,000) ÷ 2) = 0.53 times (rounded)
- Net sales $2,000,000.00, Total assets at the start $900,000.00, Total assets at the end $1,100,000.00 gives Asset turnover 2, Average total assets $1,000,000.00.Source: OpenStax, Principles of Finance, 6.2 Operating Efficiency Ratios (total asset turnover = net sales ÷ average total assets; Clear Lake Sporting Goods, 0.53 times). https://openstax.org/books/principles-finance/pages/6-2-operating-efficiency-ratios
- Net sales $120,000.00, Total assets at the end $250,000.00 gives Asset turnover 0.48.
How it works
- Average total assets = (total assets at the start + total assets at the end) ÷ 2
- Asset turnover = net sales ÷ average total assets
Rules:
- Net sales and total assets are $0 or more, at most $1 quadrillion.
- If you leave the starting total empty, the average is the ending total alone.
- Average total assets of $0 give no answer. A result too large or too small to show as a number also gives no answer.
- The arithmetic is exact on the decimals you type. The ratio shows to 2 decimals, with halves rounded up.
Assumptions
- Net sales cover one year, and the two totals are from the start and end of that year.
Worked examples by hand
Clear Lake Sporting Goods. Net sales $120,000; total assets $200,000 and $250,000. Average = $225,000. Turnover = 120,000 ÷ 225,000 = 0.53 (8/15 = 0.5333…).
A retailer. Net sales $2,000,000; total assets $900,000 and $1,100,000. Average = $1,000,000. Turnover = 2.
Ending total only. Net sales $120,000, ending total assets $250,000. Turnover = 120,000 ÷ 250,000 = 0.48.
Other questions people ask
What is asset turnover?
Total asset turnover shows how well a company uses its assets to make sales. A turnover of 2 means $2 of sales a year for every $1 of assets.
How do I calculate asset turnover?
Divide net sales by the average total assets. The average is the starting total plus the ending total, divided by 2. Clear Lake Sporting Goods had $120,000 of net sales and total assets of $200,000 and $250,000, so its turnover was 120,000 ÷ 225,000 = 0.53.
What is a good asset turnover ratio?
It depends on the business. Grocers and other retailers sell a lot from few assets and often turn over 2 or more. Utilities and factories need large plants and often turn over less than 1. Compare with similar companies and with past years.
Why use average total assets?
Sales are made over the whole year, but total assets are a balance on one day. The average of the two balances matches the year better. If you have only one balance sheet, leave the starting total empty and the calculator uses the ending total.
How does asset turnover fit into ROE?
In the DuPont method, return on equity is the profit margin times total asset turnover times the equity multiplier. A higher asset turnover lifts ROE when margins and leverage stay the same.