![]() The only thing which one must understand for the comparison of this ratio is that ratios of companies operating in the same industry must be used for comparison as it differs from industry to industry. Profit Calculation: This ratio does not give a clear picture of how good/bad a company is earning its profit.Īsset turnover ratio is a key number for every business be it big or small because it helps managers to determine how effective or efficient their asset deployment has been for the company.Thus it is not possible to understand or measure how individual asset is performing. Individual asset performance: The ratio is the performance of all assets in general. ![]() Thus this ratio can be incorrect based on the list of the actual asset used an asset which did not contribute at all.
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