Equity Turnover Ratio
factor.formula
Equity Turnover Ratio:
Average Total Equity:
This formula calculates the equity turnover rate. The numerator is the operating income of the most recent 12 months, which represents the total income earned by the company through operating activities in the past year. The denominator is the average shareholders' equity, which reflects the average capital scale used by the company during the reporting period by the average of the shareholders' equity at the beginning and end of the period. By comparing operating income with average shareholders' equity, the efficiency of the company's use of shareholders' capital can be evaluated.
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Refers to the company's total operating income for the most recent 12 months, also known as rolling annual operating income.
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It is the average of the total shareholders' equity at the beginning and end of the period, used to measure the average size of shareholders' capital invested by the company during the reporting period.
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Refers to the total amount of shareholders' equity at the beginning of the reporting period, reflecting the scale of capital invested by shareholders at the beginning of the period.
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Refers to the total amount of shareholders' equity at the end of the reporting period, reflecting the scale of capital invested by shareholders at the end of the period.
factor.explanation
Equity Turnover Ratio measures the efficiency of a company in using its shareholders' equity to generate operating income. The higher the index, the more efficient the company is in using shareholders' capital for operating activities, and the more income it can generate with less shareholder investment. A high turnover ratio is usually seen as a signal of a company's strong management and operation capabilities, reflecting its strong profitability and operating efficiency. On the contrary, a low turnover ratio may mean that the company is insufficient in using shareholders' capital and needs to focus on its operating efficiency and profitability. This indicator is an important reference for evaluating a company's profitability and operating efficiency.