Total Asset Turnover Calculator

More about the Total Asset Turnover so you can better use the results provided by this calculator, for a topic that is very popular in corporate finance courses .

How do you compute the total asset turnover?

The Total Asset Turnover is the ratio between sales and the average total assets. This ratio is a measure of asset management, and it roughly indicates how many dollars in sales a firm has for each $1 in assets. In order to calculate the Total Asset Turnover, we use the following formula:

\[ \text{Total Asset Turnover} = \displaystyle \frac{\text{Sales}}{\text{Average Total Assets}}\]

Notice that there formula uses the average total assets in the denominator, and not the total assets plain.

Example: Calculation of Total Asset Turnover (TAT)

Question: Consider the case of a firm that has sales for $46,000, and its total assets are $560,000, and the total assets from the previous year were $678,000. Compute the Total Asset Turnover for this company.

Solution:

This is the information we have been provided with:

Sales =	\(46000\)
Current Total Assets =	\(\text{\textdollar}560000\)
Previous Total Assets =	\(\text{\textdollar}678000\)

The total asset turnover is computed using the following formula:

\[ \begin{array}{ccl} TAT & = & \displaystyle \frac{\text{Sales}}{\text{Average Total Assets}} \\\\ \\\\ & = & \displaystyle \frac{\text{\textdollar}46000}{(\text{\textdollar}560000+\text{\textdollar}678000)/2} \\\\ \\\\ & = & \displaystyle \frac{\text{\textdollar}46000}{\text{\textdollar}619000} \\\\ \\\\ & = & 0.07 \end{array} \]

Therefore, the total asset turnover is \(0.07\), for the given sales of \(\text{\textdollar}46000\), current total assets of \(\text{\textdollar}560000\), and previous total assets of \(\text{\textdollar}678000\). This means that for every dollar in assets, the firm generated \(\text{\textdollar}0.07\) in sales.

Calculators of efficiency financial ratios

The Total Asset Turnover is a very commonly used financial ratio to measure efficiency in assets management. We provide many other financial ratio calculators in our site, including our current ratio , quick ratio , our days' sales in receivables , and our inventory turnover calculator.

A related financial ratio that is usually reported along with the Total Asset turnover is the Total Debt Ratio Calculator ,that has several uses when assessing the financial health of a firm.