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Asset turnover The asset turnover ratio is an expansion on the idea of efficient use of capital. It expands this principle to include all assets. There are several important limitations to this ratio as it is influenced by depreciating assets and when used as a management performance indicator can be misrepresented by the use of older assets. Because of this significant limitation, asset turnover ratio should be used only with similar related measurements.
To calculate asset turnover ratio: Asset turnover = Net sales revenue / average total assets |
