A turnover ratio represents the number of assets or liabilities that a company replaces with its sales.
The asset turnover ratio formula is equal to net sales divided by the total or average assets of a company.
Assets Turnover ratio= Net sales/ Total average Assets
Company A reported beginning total assets of $199,500 and ending total assets of $199,203. Over the same period, the company generated sales of $325,300 with sales returns of $15,000.
Assets Total over Ratio=$325,300-$15,000/$199,500+$199,203/2=1.5565
Company A generated $1.5565 in sales.
Some important Turnover Ratios are: