The asset turnover rate is the ability of assets to be turned into profits. You obviously want to achieve the highest asset turnover rate possible, thus guaranteeing your business is making the highest profits it can. Learn more about the rate helping your company keep track of how efficiently it is using its assets by learning more about how the asset turnover rate is figured.

The easiest way to describe asset turnover is to calculate the total revenue for a time period divided by the total assets, but there is a lot more to the turnover rate and using it properly in any financial statements. Learn more about the asset turnover rate by:

1. Finding the proper definition and explanation of the turnover rate and how it is used.

2. Extending your understanding of the asset turnover rate by taking some advanced courses.

3. Using the asset turnover rate calculator to help you compare situations.

Action Steps
The best contacts and resources to help you get it done

Use the asset turnover rate definition as a place to start

Start learning about the asset turnover rate by reviewing the definition of the word. Compare how a company's assets and revenue affect the asset turnover rate. Read how the turnover rate affects investors and possible profits.

I recommend: Review the asset turnover rate definition at Money-Zine.com, and read about the turnover rate in the book "The Complete Idiot's Guide to MBA Basics" at Google Books.

Find asset turnover rate courses for beginners training

Advance your understanding of the asset turnover concept by learning hands-on how the asset turnover rate affects a business. Find a professional training course, seminar or on-line tools to continue your asset turnover rate education.

I recommend: Purchase the Intellexis online course on asset turnover rate for beginners. The two-hour course includes information about calculating the rate, analyzing performance and using the information to improve business. The ENS eLearning Operational Analysis: Asset Turnover is another online course available with similar content.

Use asset turnover rate calculators to help you learn

If you're still learning the proper asset turnover rate calculations, try using an online calculator. Find an asset turnover calculator into which you can input your sales and asset numbers and get instant results, or look for a calculator that can actually help you learn how to figure the turnover rate yourself.

I recommend: Try the asset turnover calculator at WebCalc.net or use the financial calculator for turnover at Math.info. This calculation also has a button that will show you how the turnover rate is figured out; this can be a helpful tool in teaching you the proper way to calculate turnover rate on your own.

The term asset turnover rate refers to the aggregate revenue a company makes for every dollar of capital. By calculating the asset turnover rate, a company gains a better idea of how efficiently it utilizes assets to produce revenue.

Financial planners who specialize in small business financial management are an excellent source for asset turnover rate information. Whether listening to an advisor or reviewing information independently, consider the following facts about asset turnover rates:

1. High asset turnover rates indicate that the company uses its assets efficiently.

2. The higher the asset turnover rate, the lower your profit margin.

3. As the asset turnover rate gets lower, additional physical resources are necessary to produce each dollar of sales.

4. Retailers typically have high asset turnover ratio because of intense competition.

Action Steps
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Calculate the asset turnover rate

You can calculate the asset turnover rate by hand or by using an online calculator.

I recommend: Use the simple formula provided by Money-zine to calculate your company's asset turnover rate by hand. You'll need to know your company's total revenue and total assets. If you'd prefer skip the math, you can calculate the asset turnover rate online at Webcalc.net.

Hire a financial consultant to help with asset turnover rate

A financial advisor may make a good asset turnover rate consultant. You should look for financial advisors with experience in your type of business. For example, if you're in retail, look for an advisor that has experience guiding retail businesses.

I recommend: Start your search for an advisor at the International Association of Registered Financial Consultants website. Enter your zip code and a list of local financial advisors appears. Go to the Financial Planning Association website and search for a financial planner your zip code and the area of specialty you want, such as business planning.

Get asset turnover rate training

Consider attending a training seminar to gain an in-depth understanding of asset turnover rate. During training seminars, you'll receive asset turnover rate advice from professionals.

I recommend: Obtain onsite training for your employees and yourself through K Alliance. This company brings trainers to your site, allowing you to training several staff members simultaneously. K Alliance also offers business accounting CD-Rom training software that is specific to accounting for assets. The Financial Management Training Center offers a variety of courses that will boost your knowledge of financial topics related to your business.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  If you're a small business owner ask your accountant for a referral to financial advisor who may be able to help with asset turnover rate.

The asset turnover rate measures the ability of a company to use its assets to produce sales. The more those assets diminish, the fewer sales a company will probably be able to make. If those numbers stay healthy, then the company should have enough inventory to feed the market place.

The asset turnover rate is sometimes referred to a the "asset turnover ratio" or simply "turnover ratio" when speaking of a company's fiscal health. Staying on top of the latest news and trends regarding a companies asset turnover rate will give you an introspective look at the direction a company may be headed.

1. Locate online publications that specialize in covering businesses and their asset turnover rate.

2. Find newspapers with online websites that publish articles keeping tabs on the asset turnover rate of companies.

3. Find websites geared toward financial professionals that release asset turnover rate news and trends.

Action Steps
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Find online magazines that report on the asset turnover rate of a given company

Every publicly traded company must release earnings reports at least once per quarter so that there is transparency to its financial records. The asset turnover rate is commonly discussed as it helps illuminate where a company may or may not be making money. Find the publications that discuss the asset turnover rate of companies.

I recommend: Visit the website for Industry Week. It specializes in covering the business of manufacturing, including reporting on a company's asset turnover rate. Search by company or use the term asset turnover rate. The International Profits Associates publication offers business advice and news regarding asset turnover rates and ratios.

Check out online newspapers that cover business and the asset turnover rate of companies

There are many online newspapers that serve as reputable sources for business information. Find the newspapers that cover the metrics of companies financial statements, including terms such as asset turnover rates.

I recommend: Visit the website for the Financial Times. Utilizing the search engine you can find articles related to asset turnover rates. Also the website for Biz Journals, another online business journalism site, has many articles discussing asset turnover rates.

Scan through financial websites that release asset turnover rate financial articles

In the finance industry, there are some quality sources which people constantly read. These sources go beyond the cursory glance that other publications offer and really dig down to the hard core financials of a company's fiscal health. Locate these sources and read them frequently for the latest asset turnover ratio news.

I recommend: Visit the website for Business Week, a publication geared at financial professionals, for coverage of asset turnover. Another great business resource is Morningstar. Search for asset turnover rate information and updates by company name.

Asset turnover demonstrates the relationship between revenue and assets. Asset turnover rate determines the total sales for every dollar of a company’s assets. The asset turnover ratio is reflective of how well a company is managing its fixed or total assets.

The general rule of thumb with asset turnout rates is that a higher annual turnover rate indicates that a company could be having difficulty collecting money for products or services offered. To gain a better understanding about asset turnover, it’s important to familiarize yourself with asset turnover rate key terms.

Action Steps
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Revenue

Revenue is the total amount of cash a company receives in exchange for its products and services over a specific timeframe. Revenue should be calculated before the deduction of any expenses.

I recommend: Find out more about revenue at Investorwords.com.

Total assets

A company's total assets include all current cash, marketable securities, net property and other assets a company may have. The asset turnover rate is calculated by taking total revenue and dividing it by total assets.

I recommend: Read more about total assets at Spireframe Software.

Inventory turnover

Inventory turnover is a primary asset turnover ratio that is calculated by dividing the total cost of goods sold by the average amount of inventory available in a specific time period.

I recommend: Find out more about inventory turnover at NetMBA.com.

Capital investment

Capital investment covers the variety of decisions made on how business capital will be spent. It is believed that analyzing how businesses spend their money is an effective way to determine a company's performance.

I recommend: Read more about capital investment at Investopedia.

Operating cycle

The operating cycle determines the timeframe required for cash to bring in a business return. The operating cycle helps businesses evaluate cash, accounts payable/receivables and inventory replacement.

I recommend: Learn more about operating cycle at the Queens County Overall Economic Development Corporation.

Net profit margin

Net profit margin is calculated by dividing net income by total sales. As the asset turnover rate increases, your profit margin decreases. A falling net profit margin indicates that a company is making less profit on every one dollar of goods or services sold.

I recommend: Read more about net profit margin at Coolinvesting.com.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  It's important to note the asset turnover rate can increase during busy times for your business and decrease during the off-season. To account for the affects of the various high and low seasons for your business you may choose to calculate your company's performance by evaluating the average accounts receivables.