Finance Formulas / July 17, 2018 / Alyvia French
The total asset turnover ratio calculates net sales as a percentage of assets to show how many sales are generated from each dollar of company assets. For instance, a ratio of .5 means that each dollar of assets generates 50 cents of sales.
Economic profit is not recorded on a company’s financial statements nor is it required to be disclosed to regulators, investors or financial institutions. Meanwhile, accounting profit is a widely used performance measurement to indicate the overall financial success of an organization. Accounting profit measures the actual cash outlays and inflows, while economic profits incorporate a "what if" analysis. For this reason, an entity may report an accounting profit but realize an economic loss because resources could have been utilized better.
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