The Implication of Average Asset Turnover (Coursework Sample)
Financial KPIs measure business performance against specific financial goals such as revenue or profit. They show the financial health of a business against internal benchmarks, competitors, and even other industries. Financial KPIs are widely used in strategic planning and reporting to help people decide where to focus their investment.
Keeping close tabs on your small business’s financial performance is essential to long-term success. Below, you’ll find eight important financial KPIs that will help you measure your business’s financial health and boost your growth rate.
FOR EACH WEEK, SELECT ONE FINANCIAL INDEX AND WRITE ABOUT IT
Define IT, present its implication on business performmance and compare this with the performance of your company on the capsim simulation.
Use at least 2 current references in APA 7 format and remember to format the paper accordingly.
Average Asset Turnover
Average Asset Turnover
Creation of the Measure
Asset turnover refers to the ratio of a company’s revenues to its assets. The ratio, which is calculated by dividing net sales by average total assets, measures the company's efficiency by utilizing its fixed and current assets to generate income (Warrad & Al Omari, 2015). Net sales refer to the income a company receives after deducting all costs of returns, allowances made for damaged goods, and discounts given to buyers from total sales (Warrad & Al Omari, 2015). Therefore, this measure provides a more accurate view of a company's income than the gross sales measure, which fails to recognize discounts, returns of goods, and damaged goods. On the other hand, average total assets refer to the value of all assets recognized in a company’s balance sheet over the past two years.
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