Home
Tax
Accounting
Payroll & Benefits
Public Companies

 

Total asset turnover indicates a company's efficiency at using its assets to generate sales. The higher the number the more efficient a company is at using its assets. Management should be interested in this metric since it measures how efficiently a company's operations are. Creditors and investors will also be interested in using this measure since it helps understand what type of operation they could be investing in.

The formula for total asset turnover is: Annual Sales / Total Assets

1. Annual sales should be net
2. Total Assets typically include net book value of capital and intangible assets.


Example of Total Asset Turnover:

General Electric financial data for a three year period

 

PERIOD ENDING		31-Dec-08	31-Dec-07	31-Dec-06
Total Revenue		182,515,000	172,738,000	163,391,000
Assets
Current Assets
Cash And Cash Equivalents		48,187,000	15,747,000	14,275,000
Short Term Investments		-	45,428,000	47,826,000
Net Receivables		34,850,000	22,259,000	13,954,000
Inventory		13,674,000	12,897,000	11,401,000
Other Current Assets		-	-	-
Total Current Assets		96,711,000	96,331,000	87,456,000
Long Term Investments		406,614,000	394,187,000	351,272,000
Property Plant and Equipment		89,086,000	77,895,000	74,966,000
Goodwill		81,759,000	81,116,000	73,339,000
Intangible Assets		14,977,000	16,178,000	13,094,000
Accumulated Amortization		-	-	-
Other Assets		108,622,000	129,630,000	97,112,000
Deferred Long Term Asset Charges		-	-	-
Total Assets		797,769,000	795,337,000	697,239,000
Total Asset Turnover		22.88%	21.72%	23.43%