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# Operating Asset Turnover Calculator

What is operating asset turnover?How to calculate operating asset turnover — Operating asset turnover formulaHow to interpret the operating asset turnover ratioFAQs

With this operating asset turnover calculator, you can easily calculate the operating asset turnover of a company. The operating asset turnover is a metric that will help you analyze a company's operational performance in generating revenue. Please feel free to check out our total asset turnover calculator and fixed asset turnover calculator to learn more about this topic.

This article will help you understand what operating asset turnover is and how to calculate the metric using the operating asset turnover formula. We will help you understand this concept by demonstrating some practical examples.

## What is operating asset turnover?

Operating asset turnover is an efficiency ratio that measures how efficiently a company can generate revenue using its operating assets. It is defined as sales divided by the operating assets.

Unlike the total asset turnover, this metric is particularly useful when a company holds a significant portion of assets that are not pertinent to its operation. This metric excludes those idle assets and focuses on assets the company uses for its day-to-day operations.

## How to calculate operating asset turnover — Operating asset turnover formula

Now that you understand the definition of operating asset turnover, we can discuss how to calculate the operating asset turnover ratio.

To understand the operating asset turnover calculation, let's take Company Alpha with the following information as an example:

• Sales: $3,000,000 • Cash:$250,000
• Accounts receivable: $200,000 • Inventory:$400,000
• Prepaid expenses: $100,000 • Fixed assets:$1,000,000

The calculation requires three steps:

1. Calculate operating assets.

Firstly, we need to calculate the operating assets using the formula below:

operating assets = cash + accounts receivable + inventory + prepaid expenses + fixed assets

Company Alpha's operating assets is $250,000 +$200,000 + $400,000 +$100,000 + $1,000,000 =$1,950,000.

2. Determine the sales.