The Asset Turnover ratio is a key profitability ratio for a small business like A Touch of Tuscany. It measures the ability of a small business like A Touch of Tuscany to generate enough sales to cover its assets. In other words, it is a measure to get a sense of how many times the total assets of the firm are being covered by the Sales / Revenues that the small business brings in. Clearly the higher the Asset Turnover ratio the better it is for the company.
In this analysis we can see that the asset turnover ratio will be 3.0, 2.8 and 2.6 for 2009, 2010 and 2011 respectively. This is of course a healthysign since it shows that we will have sales that will be three times the assets that have been invested in the busienss - the higher the asset turnover ratio, the better, and if sales were to come in lower than projected this asset turnover ratio will also be negatively impacted.
The total assets that we are including in our calculations above are $488k, $541k and $612k in the three years respectively and this of course includesthe current assets and fixed assets like cookers, refrigeration, improvements to our dinning area and so on.
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