question archive What can it mean for a company or business to have an asset turnover of 1

What can it mean for a company or business to have an asset turnover of 1

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What can it mean for a company or business to have an asset turnover of 1.5; ROE of 8.7%; ROA of 4.4%?

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Sales/Assets=1.5

Net Income/Assets=4.4%
=>Profit Margin=Net Income/Sales=4.4%/1.5=2.9333%

RoE=Net Income/Equity
RoA=Net Income/Assets

RoE/RoA=Assets/Equity
=>Assets/Equity=8.7%/4.4%=1.98

For 1$ of assets, the company is generating 1.5$ of sales, 0.044$ of net income (net profit margin of 2.9333%), 0.51$ of equity, 0.49$ of debt