Are you looking to maximize your company’s efficiency? If so, you’ve likely considered using a Total Asset Turnover Calculator. But what exactly does it do, and how can it help your business? In this blog post, we’ll dive into the details.
Total Asset Turnover Calculator
What is Total Asset Turnover?
Total asset turnover measures the efficiency of a company’s use of its assets in generating sales or revenue. It tells investors how well the company is turning its assets into sales or revenue and can be used as an indicator of how efficient the management team is when it comes to utilizing their resources.
The formula for calculating total asset turnover is simple: divide net sales or revenues by total assets. By dividing net sales by total assets, you are essentially measuring the amount of return each dollar invested in assets generates.
The higher the number, the better performance a company has achieved with its assets.
Total Asset Turnover Calculator Formula :
Total Asset Turnover = Net sales / Total assets
Let’s take another example, Company Ecuyas, with the following information:
Name: Company Ecuyas Revenue: $20,000,000 Beginning assets: $10,000,000 Ending assets: $12,000,000
Determine the revenue
The revenue for Company Beta is $20,000,000.
Calculate the average assets
The average assets for Company Beta is ($10,000,000 + $12,000,000) / 2 = $11,000,000.
Calculate the total asset turnover
The total asset turnover for Company Beta is $20,000,000 / $11,000,000 = 1.82x.
How to Improve Total Asset Turnover?
There are several ways that businesses can improve their total asset turnover:
- Increase Sales: The most obvious way to improve total asset turnover is to increase net sales. This can be achieved by expanding the customer base, improving product offerings, and increasing marketing efforts.
- Sell Unused Assets: If a company has a lot of unused assets, it may be wise to sell these assets and use the proceeds to purchase assets that can be used more efficiently to generate revenue.
- Optimize Inventory Management: Effective inventory management can help businesses reduce the amount of idle assets on their balance sheet and improve the utilization of their assets.
- Invest in Technology: Investing in technology can help businesses automate processes and reduce the amount of manual labor required to complete tasks. This can lead to improved asset utilization and higher total asset turnover.
So hope you understand all the process, now you can calculate the same total asset turn over calculation on our website.