TOTAL ASSET TURNOVER Definition

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TOTAL ASSET TURNOVER measures managements efficiency in managing all of a firm's assets - specifically the generation of revenues from the firms total investments in assets. This ratio is extremely important in high asset firms such as manufactures and telecommunications companies. Generally, the higher this ratio as compared to like companies or the industry (Formula: Net Revenue / Total Assets):

  •  the smaller the investment required to generate sales, thus the more profitable the firm.
  •  indicates the firm has less money tied up in fixed assets for each dollar of sales revenue.

Learn new Accounting Terms

DEFERRED ASSET is an amount owed to an entity that is not expected to be received by that entity within one year from the date of the balance sheet.

OUTSOURCE is to obtain goods or services from an outside supplier; i.e., to contract work outside of your budget and control. (An example would be companies outsourcing a percentage of their direct labor in order to maintain a flexible workforce.).

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