Answer
Asset turnover gauges a company's efficiency in generating net sales from assets. The ratio shows the sales produced due to every dollar spent on assets. Comparatively, the return on assets depicts the net income derived from an entity’s total assets. The rate of return on assets depicts an entity's profitability due to its capacity to consolidate its asset turnover with its profit margin.
Work Step by Step
Asset turnover gauges a company's efficiency in generating net sales from assets. The ratio shows the sales produced due to every dollar spent on assets. Comparatively, the return on assets depicts the net income derived from an entity’s total assets. The rate of return on assets depicts an entity's profitability due to its capacity to consolidate its asset turnover with its profit margin.
