Turnover formula3/15/2023 How to Interpret Asset Turnover Ratio (Low vs. Hence, it is often used as a proxy for how efficiently a company has invested in long-term assets.Ĭonsidering how costly the initial purchase of PP&E and maintenance can be, each spending decision towards these long-term investments should be made carefully to lower the chance of creating operating inefficiencies. The ratio is meant to isolate how efficiently the company uses its fixed asset base to generate sales (i.e., capital expenditures).
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