What is the Total Asset Turnover formula?

The Total Asset Turnover ratio measures a company's efficiency in using its assets to generate sales. The formula for this ratio is derived by dividing total sales revenue by total assets. This demonstrates how many dollars of revenue are generated for each dollar of assets owned by the company, indicating the effectiveness of asset utilization.

The focus on total sales and total assets reflects the overall operational efficiency of the company rather than just profit or fixed assets, providing a broader perspective on asset management in generating revenue. By using "Sales / Total Assets," one gains insight into the operational performance relative to the resources at the company's disposal.