Unlike total asset turnover, this ratio excludes non-operating assets such as investments, so it focuses on the core business. A higher turnover means more sales from each dollar of operating assets.
How to use the Operating Asset Turnover Calculator
- Cash
- Accounts receivable
- Inventory
- Prepaid expenses
- Fixed assets (net)
- Sales
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter the operating assets from the balance sheet and sales for the year.
Inputs explained
| Field | What to enter |
|---|---|
| Cash | Amount in your currency |
| Accounts receivable | Amount in your currency |
| Inventory | Amount in your currency |
| Prepaid expenses | Amount in your currency |
| Fixed assets (net) | Amount in your currency |
| Sales | Amount in your currency |
What each result means
- Operating assets = [Cash] + [Accounts receivable] + [Inventory] + [Prepaid expenses] + [Fixed assets (net)]
- Operating asset turnover = [Sales]÷[Operating assets]
- Days of sales tied up in operating assets = [Operating assets]÷[Sales]×365
Example values
How the main result changes when Cash changes and everything else stays at the example values above:
| Cash | Operating asset turnover (×) |
|---|---|
| 25,000 | 2.05 |
| 37,500 | 2.03 |
| 50,000 | 2 |
| 62,500 | 1.98 |
| 75,000 | 1.95 |
| 100,000 | 1.9 |
Formula
Operating assets = cash + accounts receivable + inventory + prepaid expenses + fixed assets
Operating asset turnover = sales ÷ operating assets
Worked example
Inputs: Cash: $50,000; Accounts receivable: $120,000; Inventory: $180,000; Prepaid expenses: $20,000; Fixed assets (net): $630,000; Sales: $2,000,000.
Results: Operating assets = $1,000,000.00; Operating asset turnover = 2 ×; Days of sales tied up in operating assets = 183.
Frequently asked questions
What is a good operating asset turnover?
Higher is better; compare with peers in the same industry.
Why exclude investments?
They don't help generate operating sales, so they would distort the ratio.
How can a company improve it?
Faster collections, leaner inventory and better use of equipment.