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

ENTRY see JOURNAL ENTRY.

SWEEPING ACCOUNTS is when an entity zeros out a monetary asset account (takes the money) that does not meet an established mandatory monetary hurdle at which they will make a payment to the holder of that account, e.g., if a salesman does not make a certain amount of sales required over a time period, his company will not pay him commission on the sales that were made during that period and sweep his account balance to zero at the end of the time period.

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