A financial ratio which measures a company’s efficiency at using its assets to generate sales or revenue. In other words, the amount of sales it achieves in rand terms, measured against every rand in assets it employs to achieve that sale. For investors and shareholders, the higher the number the better, as it indicates greater efficiency and a high profit margin. The formula for measuring asset turnover is:

Sales divided by Assets. Typically, ‘assets’ will be ‘total assets’, which comprises fixed + current assets.

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