The total asset turnover rate refers to the ratio of a company's net sales income to its average total assets within a certain period of time. Therefore, this indicator is used to judge the company's asset investment scale and sales capability level. The ratio between them. By analyzing the total asset turnover rate, we can evaluate the efficiency of the company's asset use. Of course, it is best to conduct a comprehensive analysis combined with sales*profit. So what are the factors that lead to the decline in total asset turnover?

The total asset turnover rate can reflect the company's ability to operate assets. Generally speaking, the higher the value, the faster the company's asset turnover rate, which also represents the company's operation. The stronger the ability, the greater the investment value of such company stocks. But in reality, many companies will also have their total asset turnover rate decline due to various reasons. In summary, there are three main factors that lead to the decline in their total asset turnover rate:

1. The company's The reduction in sales capacity leads to a reduction in the company's sales revenue. As a result, the company's capital return speed will slow down, and the total asset turnover rate will naturally decline. This reason is the most common and largest cause of its decline. Reasons;

2. The company's excessive product inventory has led to a reduction in inventory turnover rate. In order to maintain the production and sales of products, the company will invest more funds in inventory. In this way, The turnover rate will also be reduced. For companies with poor operating performance, most of the time the total asset turnover rate decreases due to this reason;

3. When the company has a lot of idle funds, it will also cause the total asset turnover rate to decrease. decreases and will remain low for a long time. On the other hand, too much idle funds in a company also means that the company's business operations are not good. Otherwise, the capital turnover should be very fast and there would not be too much idle funds. In addition, some companies have many loans or non-performing assets. The more such assets, the lower the total asset turnover rate will be.

Once the company's total asset turnover rate is low, the company should take some measures to improve the utilization of assets, so that the company can move towards a healthy development track.