Meaning and calculation
Asset turnover shows how much revenue corresponds to the company’s average carrying amount of assets. In a common analytical version, revenue for the period is divided by average assets for the same period. This is a measure of how intensively resources are used, not a direct answer to how profitable the company is.
If annual revenue is 1.2 million roubles and average assets are 600 thousand, the ratio is 2. For a capital-intensive manufacturer it may be lower than for an intermediary without its own equipment, even when both businesses are stable and profitable.
Limits of comparison
A high value is not always better: it may reflect a small balance-sheet carrying amount for assets acquired long ago or dependence on leased resources. Comparisons should account for the industry, accounting policy, group structure and one-off sales. Revenue growth caused by higher prices can also improve the ratio without a corresponding increase in the physical volume of activity. Related reading: [peer comparison](/guides/peer-comparison/), [assets](/glossary/aktivy/), [revenue](/glossary/vyruchka/) and [ROA](/glossary/roa/).