A financial ratio that measures how efficiently a company uses its assets to generate sales revenue. It is calculated by dividing net sales by average total assets.
From Middle English 'assetz' (sufficient property to pay debts) and Old French 'torner' (to turn). The term evolved in 20th century accounting to describe the 'turning over' or cycling of assets through business operations.
Companies with low asset turnover aren't necessarily bad - capital-intensive industries like utilities naturally have lower ratios than asset-light businesses like software companies. The key is comparing apples to apples within the same industry!
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