![]() If so, are you lumbered with units that are not selling? It could be time to consider offloading these to a trade buyer. If you sell physical items, your inventory is often a culprit here. Your sales revenue has gone up, but the total sales turnover ratio has gone down. Now, let’s say you haven’t made any big purchases. In broad terms, have those investments paid off? Should the following year’s ratio be higher, it might be evidence that they have. For example, you could do the calculation just before you make several investments in new equipment. Total Asset Turnover Ratio = 5.3 times What does this tell you?įor a small business, the total asset turnover ratio (like other similar ratios) really comes into its own when you compare one year’s figure to the next. This is expressed as a ‘number of times per year’. Divide your sales figure by net assets to give your total asset turnover ratio.These liabilities are likely to include money owed to suppliers, loan repayments due within a year, and your outstanding tax bill – discount long-term liabilities such as loan capital due to be repaid after a year as these fall out of the period we are calculating. You arrive at this figure by dividing the value of current liabilities by total assets. the calendar year), make sure that you take sales figures for that period only- don’t inadvertently apply the sales figures for the previous tax year, for example. ![]() For accuracy, if you are calculating the ratio for the year ending 31 st December (i.e.
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