ASSET TURNOVER RATIO Definition

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ASSET TURNOVER RATIO is a general measure of a firms ability to generate sales in relation to total assets. It should be used only to compare firms within specific industry groups and in conjunction with other operating ratios to determine the effective employment of assets. Formula: REVENUE/ASSETS.

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UNDERABSORBED OVERHEAD is where total overhead has not been fully allocated to products sold or services offered. Such a condition can result in an understatement of COGS or cost of sales.

CONTRIBUTED CAPITAL see PAID-IN-CAPITAL.

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