Asset Turnover

Revenue generated per dollar of assets — how efficiently a company uses its asset base to produce sales.

Part of the Profitability & Quality course · Lesson 14 of 19

Formula

Asset turnover = Revenue / Average total assets

What it is

Asset turnover measures how much revenue a company produces for each dollar of assets it holds. It is revenue divided by average total assets. It shows how hard the asset base is working to generate sales.

Why it matters

Asset turnover is one of the three levers of return on equity in the DuPont breakdown, alongside profit margin and leverage. High turnover lets a low-margin business still earn strong returns, which is why discount retailers thrive on volume. A falling ratio can mean assets are being added faster than sales.

How it's calculated

Divide total revenue by average total assets (the average of beginning and ending total assets for the period).

How Quintarthai uses it

Revenue and total assets for asset turnover are on the Financials and Ratios tabs of a company deep-analysis page; the Stock Screener can help narrow the field with AI Smart Search.

Cross-border note. Compare asset turnover only within an industry, since capital-light tech and capital-heavy utilities differ hugely; the ratio is expressed as a multiple (times), so use the same currency for revenue and assets.

FAQ

What is a good asset turnover ratio?

It depends entirely on the industry. Retailers and distributors often have high turnover above 2, while capital-intensive utilities and telecoms may be well below 0.5. Compare a company only with its own peers.

How does asset turnover relate to return on equity?

In the DuPont framework, ROE equals profit margin times asset turnover times financial leverage. So a company can lift ROE by selling more per dollar of assets, even without higher margins.

See Asset Turnover on a real company

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