The asset turnover ratio is also a performance ratio that measures a firm’s capability to create earnings from its own shares by comparing internet earnings with typical total shares. To put it differently, this ratio demonstrates how effectively a business may utilize its shares to create sales.
The entire share turnover ratio computes net earnings as a proportion of shares to demonstrate the amount of sales are made from every dollar of business shares. As an example, a percentage of.5 means that every dollar of shares creates 50 cents of earnings.
The share turnover ratio is calculated by dividing net earnings by average total shares.