How can I evaluate the turnover of assets?
Asset turnover is a measurement of the efficiency of the company in terms of how well it transforms its assets into sales sales. The most common method of evaluation of this aspect of business is, through a simple ratio achieved by the division of the company for a certain period of time, its total assets in the same period. As a result, the ratio of the turnover of the asset, which is formed from this equation, can be used to evaluate efficiency. It is important to note that companies in different industries can be held according to different requirements in terms of overhead costs that they must bear, so the comparison should only be made between similar companies. One of the most important aspects on which investors focus on efficiency. A company with abundant assets that cannot earn on these assets with a high sales sum for possible calamity. On the other hand, Great Sales is a potential escape investment. As a result, the turnover evaluation isAsset with a key tool for investors everywhere.
The ratio of asset turnover is a method known among investors to measure the ability of the company to convert assets into sales sales. Simply put, the higher the ratio, the more efficient the society is. As an example of how this ratio works, imagine a company that has accumulated $ 800,000 (USD) in one year and holds $ 1,000,000 assets. A $ 1,000,000 USD is distributing $ 1,000,000, which means that the company produces 80 cents for each individual dollar asset.
As is the case with any ratio, the ratio of asset turnover is best used to compare companies in the same industries. For example, a comparison of the international jewelry ratio with the ratio of amlemal local grocery trade would not discover any light for efficiency. Different industries and markets have different economic and forFleeful reality affecting the efficiency of companies in them.
One thing that the turnover of assets tends to mark is the company's prices strategy in analysis. Companies with high profit margins will generally have a low turnover ratio and vice versa. This is because companies in competing industries, such as retail, will be the prices of the eye to issue their market enemies, creating a high turnover.