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Asset turnover

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Asset turnover

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  • May 22, 2022 at 6:03 pm #656203
    Isabella1
    Participant
    • Topics: 44
    • Replies: 23
    • ☆☆

    I studied on internet and many relaible sights which said that Asset Turnover= Net Sales/Average Number of Assets. However, our book states as AT= Sales/Capital Employed.
    Having said that, book definition says that Asset Turnover tells how efficiently organisation assets generated sales. This seems to be even more relatable to formula I food on internet.
    Hope you understand!

    May 30, 2022 at 4:17 pm #656860
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7065
    • ☆☆☆☆☆

    Hi,

    You need to distinguish between asset turnover and net asset turnover as they are slightly different.

    Asset turnover uses total assets as its base, where as net asset turnover uses net assets (=capital employed).

    Hope that clears it up for you.

    Thanks

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