what is the asset turnover ratio 
the asset turnover ratio measures the value of a company s sales or revenues relative to the value of its assets the asset turnover ratio indicates the efficiency with which a company is using its assets to generate revenue the higher the asset turnover ratio the more efficient a company is conversely if a company has a low asset turnover ratio it means it is not efficiently using its assets to create revenue investopedia michela buttignolcalculating asset turnover ratiothe asset turnover ratio uses the value of a company s assets in the denominator of the formula the average value of the assets for the year is determined using the value of the company s assets on the balance sheet as of the start of the year and at the end of the year the sum of the two values is divided by two total sales or revenue is found on the company s income statement and is the numerator asset turnover total sales beginning assets ending assets 2 where total sales annual sales total beginning assets assets at start of year ending assets assets at end of year begin aligned text asset turnover frac text total sales frac text beginning assets text ending assets 2 textbf where text total sales text annual sales total text beginning assets text assets at start of year text ending assets text assets at end of year end aligned asset turnover 2beginning assets ending assets total sales where total sales annual sales totalbeginning assets assets at start of yearending assets assets at end of year 