Asset turnover
How much revenue each unit of assets produces: the speed at which property turns into sales.
Formula
\text{Asset turnover} = \frac{\text{Revenue}}{\text{Average assets}}Average assets are the mean of the opening and closing balances. The measure is stored as a number of turns, not as a fraction or a percentage.
How to read the number
Separates business models: retail lives on speed of turnover at a thin margin, heavy industry on the opposite.
When the metric lies
Revaluing assets or making a large acquisition changes the denominator instantly. A fall in the measure in the year of a purchase does not mean operations worsened.
Where it is used
The metric is calculated across every security in the catalogue and appears on the instrument card, in the multiples table and in the screener.
Also known as: asset turns