Measures how efficiently a company utilizes its assets to generate revenue.

What it Measures ?

How effectively do we use our assets to generate sales?

Relevant StakeHolders 

Finance Team, CFO

In-depth Use Case / Real-world Example

Asset Turnover Ratio is calculated by dividing revenue by total assets. If a company has ₹1,000,000 in sales and ₹500,000 in assets, the asset turnover ratio is 2.0, meaning the company generates ₹2 in revenue for every ₹1 invested in assets. A high ratio indicates efficient asset utilization, while a low ratio may point to underutilized assets. This ratio helps investors understand how well a company is converting its investments in assets into sales, and it’s crucial for evaluating the operational efficiency of a business.