Assuming the company had no returns for the year, its net sales for the year was $10 billion. The company’s average total assets for the year was $4 billion (($3 billion + $5 billion) \/ 2 ). Investors who are looking for investment opportunities in an industry with capital-intensive businesses may find FAT useful in evaluating and measuring the return on money invested.<\/p>\n

You do that by comparing your firm to other companies in your industry and see how much they have invested in asset accounts. You also keep track of how much you have invested in your asset accounts from year to year and see what works. Some of the more frequently used activity ratios, aside from those mentioned earlier, are the following. As a general rule of thumb, the higher the turnover ratio, the better \u2014 since it implies the company can generate more revenue with fewer assets.<\/p>\n