What is a good asset turnover rate?


Quick Answer

It is better to have a higher asset turnover rate because it means the company is generating more revenue per dollar of asset, according to Investopedia. Since the ratio varies widely depending on the industry, it can only be compared with other firms in the same sector.

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Full Answer

The asset turnover rate is the efficiency of a company in deploying its assets, states Investopedia. Typically, asset turnover ratio is calculated annual over the fiscal or calendar year. Asset turnover ratios tend to be higher in a sector with a small asset base and high sales volume. Firms in utilities and telecommunication have larger asset bases, leading in a lower asset turnover ratio.

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