What is Asset Turn?
Measures how efficiently a company uses its assets to generate revenue.
Think of it like this
Like measuring how many times you can use your car to make deliveries - more trips per car means more efficient use.
Formula
Asset Turnover = Revenue ÷ Average Total Assets- Revenue: Annual sales
- Average Total Assets: (Beginning + Ending Assets) ÷ 2
Why it matters
- Shows efficiency of asset utilization
- Higher turnover = more efficient
- Component of DuPont analysis
- Important for capital-intensive industries
What's a good value?
< 0.5x
Low
Asset-heavy, lower efficiency
0.5-1.0x
Moderate
Average efficiency
1.0-2.0x
Good
Efficient asset use
> 2.0x
Excellent
Very efficient, asset-light
Real-world example
Walmart has high asset turnover (~2.5x) due to high sales volume relative to assets.
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