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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APPLICATION RATE, OVERHEAD is a rate used to apply manufacturing overhead to output; estimated factory overhead for a period divided by the estimated application base.

TAXABLE INCOME is that income that is reported to the government for the purposes of calculating income taxes. Taxable income normally is not aligned with the financial income reported within financial statements. See FINANCIAL INCOME.

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