Asset turnover
Asset turnover measures revenue generated per unit of the asset or capital base used. A common FA measure is revenue divided by capital employed. One definition of capital employed is total assets less current liabilities, equivalent to equity plus all non-current liabilities; some questions specify a narrower funding base or total assets instead. State the chosen basis and use it consistently when linking asset turnover with profit margin and return on capital employed.
Worked example
Revenue of $600,000 and capital employed of $300,000 give asset turnover of 2 times.
Common mistake
High turnover may reflect old, heavily depreciated assets rather than better operations; comparisons also depend on consistent denominator definitions.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | FR | Direct | Official assessment-window verification pending |
| ACCA | K1 | Supporting | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| CIMA | F2 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |
