Turnover measures how efficiently a company is using its assets to generate sales. Several types of turnover can be used to measure efficiency, but perhaps the most relevant for our discussion here is total asset turnover, or sales divided by total assets. All else equal, a company with higher turnover than its competitors is more efficient and may have some sort of advantage.
As with profit margins, turnover is of limited use when considered in a vacuum. Rather, it is usually best to compare the turnovers of companies in the same industry. Likewise, turnover should usually be used in the context of profit margin and return.
Return on Equity and Assets >>