What is a good asset turnover ratio?

It depends on the industry: above 2 is common in retail, below 0.5 in utilities.

What is fixed asset turnover?

A variant that divides revenue by net property, plant and equipment only.

How does asset turnover affect ROA?

ROA = net profit margin × asset turnover, so faster turnover raises ROA at the same margin.

Asset Turnover Ratio Formula

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Asset Turnover Ratio Calculator

The asset turnover ratio measures how much revenue a company generates for each unit of assets it holds. It divides revenue for the period by average total assets, the mean of the beginning and ending balances. A higher ratio means the business squeezes more sales out of its buildings, equipment, inventory and receivables.

Formula

Asset turnover = RevenueAverage total assets

Where

Revenue: net sales for the period
Average total assets: (beginning + ending total assets) ÷ 2

Calculator

Revenue

Total assets, beginning

Total assets, end

Result and step-by-step solution

Asset turnover

0.6667×

Each 1.00 of assets produced 0.67 of sales.

Average total assets
700,000.00 + 800,000.002 = 750,000.00
Divide revenue by it
500,000.00750,000.00 = 0.6667

How to use the formula

Asset turnover is naturally high in retail and distribution, where stock moves quickly and fixed assets are modest, and low in utilities, telecoms and real estate, which need huge investments to produce each unit of revenue. Comparisons are therefore only meaningful within an industry, or for the same company over time.

In the example, revenue is 500,000 and total assets average 750,000, so asset turnover is 0.67: each 1.00 of assets produced 0.67 of sales. Asset turnover is the efficiency link in the DuPont analysis: net margin × asset turnover = ROA. To dig into which assets are slow, look at inventory turnover and receivables turnover.

Frequently asked questions

What is the asset turnover formula?: Asset turnover = revenue ÷ average total assets.
What is a good asset turnover ratio?: It depends on the industry: above 2 is common in retail, below 0.5 in utilities.
What is fixed asset turnover?: A variant that divides revenue by net property, plant and equipment only.
How does asset turnover affect ROA?: ROA = net profit margin × asset turnover, so faster turnover raises ROA at the same margin.

Last reviewed: September 26, 2026. Calculations run in your browser and were checked against numpy-financial, SciPy and published spreadsheet examples.