Asset turnover is a financial ratio which calculates the company's efficacy at using its assets in generating sales or revenue.
In 2012 and 2013 a textile company had Rs.960000 and Rs.1690000 in assets respectively. The company generated revenue of Rs.1360000. Calculate the total asset turnover ratio for the company.
Beginning assets = Rs.960000 Ending assets = Rs.1690000 Sales revenue = Rs.1360000
Average total assets = (Beginning assets + Ending assets) / 2 = (960000 + 1690000) / 2 = 2650000 / 2 = 1325000 Rs
Total Asset Turnover = Net sales revenue / Average total assets = 1360000 / 1325000 = 1.026