Glossary
Asset Turnover
Revenue divided by average total assets — sales generated per dollar of assets.
Asset Turnover = Revenue / Average Total Assets. It measures how many dollars of sales each dollar of assets generates, capturing the operational efficiency of the balance sheet.
Industry context dominates: discount retailers (Walmart, Costco) routinely run above 2.0 because high inventory turn drives revenue against modest assets; utilities and telecoms run below 0.5 because their assets are massive long-life infrastructure.
Asset turnover is one of the three DuPont components of ROE, alongside net margin and the equity multiplier. A falling turnover usually signals overinvestment in fixed assets or a slowdown in underlying sales.