Total Assets Turnover Ratio
Assets are used to generate sales therefore a firm should manage its assets efficiency to maximize sales. The relationship between sales and assets is called assets turnover. The firm can compute the net assets (Capital employed). Turnover simply by dividing sales by net assets. The standard ratio is that the sales should be at least 2 times value of the assets.
Credit Sales
Total Asset turnover Ratio = ————————————-
Average Accounts Receivable
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