By VestAI Research | Last updated: March 2026
Asset Turnover Ratio: Meaning, Definition & Indian Stock Market Examples
Revenue divided by total assets — measures how efficiently assets generate sales.
What is Asset Turnover Ratio?
Asset Turnover = Revenue ÷ Total Assets. It measures how much revenue a company generates per rupee of assets. A higher ratio indicates more efficient use of assets to generate sales. Combined with net profit margin, it determines ROA through the DuPont framework.
Asset Turnover Ratio — Indian Stock Market Example
Retail companies like D-Mart have asset turnover ratios of 2–3x (high revenue relative to assets). Capital-intensive businesses like NTPC have asset turnover below 0.5x. IT services companies like TCS typically show asset turnover of 0.8–1.2x, offset by very high net margins to achieve strong ROA.
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Analyse with OrionFrequently Asked Questions about Asset Turnover Ratio
Why does asset turnover vary so much across sectors?
Business models determine asset intensity. Retail and services are asset-light with high turnover. Capital-intensive industries like power, steel, and infrastructure need huge assets relative to revenue, giving low turnover. This is why you must always compare within industry.
How does asset turnover link to ROA?
ROA = Net Profit Margin × Asset Turnover (DuPont formula). A company can achieve high ROA via high margins (luxury brands) or high asset turnover (hypermarkets) or both. Understanding which driver generates ROA helps assess sustainability.
Related Terms
Return on Assets
Net profit divided by total assets — measures how efficiently assets generate profit.
Return on Equity
Net profit as a percentage of shareholder equity — measures capital efficiency.
Return on Capital Employed
EBIT as a percentage of capital employed — measures total capital efficiency including debt.
Working Capital
Current assets minus current liabilities — the buffer for day-to-day operations.
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