Asset turnover

The total sales made out of every unit of a company's asset. Asset turnover is calculated by dividing the firm's sales in units of local currency by its assets in the same currency. Asset turnover also exposes how efficient the company is in generating sales. A high asset turnover is the result of a company with products or services offered having low profit margins. This is the result of increased consumer demand with a lower stamp price. A low product price mostly translates into sacrificing a huge profit margin to keep its products at a price in the attractive price range for consumers.

A low asset turnover reflects the opposite, a company may put a higher profit margin to take advantage of the exclusivity of a certain product that does not appeal to a lot of people. However, even if the product would be a prime "must have" a company can have high profit margins but at the same time sell products like pancakes.

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