Sales to Total Assets Ratio Analysis

Definition: Sales to Total Assets ratio indicates how efficiently the firm generates sales revenue on each dollar of assets. It is defined as the total assets divided by the turnover of the firm.

Formula:
Sales to Total Assets = Sales / Total Assets

Example:
BCD Company has the following information:
Total sales $500,000
Sales returns $20,000
Fixed Assets (Net book value) $180,000
Cash $30,000
Bank $10,000
Trade Debtors $15,000
Other Debtors $5,000
Closing Stocks $70,000

Then:
Net sales = 500,000 - 20,000 = $480,000
Total Assets = 180,000 + 30,000 + 10,000 + 15,000 + 5,000 + 70,000 = $310,000
Sales to Total Assets = 480,000 / 310,000 = 1.55 times
This means that for every dollar of assets, BCD Company generated $1.55 in revenue.

* Next: Sales to Current Assets Ratio
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