Finance / July 12, 2018 / Alianna Dominguez
There are many methods of distribution depreciation amount over its useful life. The following are some of the widely used methods. The total amount of depreciation for any asset will be identical in the end no matter which method of depreciation is chosen; only the timing of depreciation will be altered. Keep in mind that accelerated depreciation methods (such as declining balance or sum of the years' digits) can artificially reduce profit in the near term followed by higher profits in later terms, which can influence reported cash flows.
The asset turnover ratio, also known as the total asset turnover ratio, measures the efficiency with which a company uses its assets to generate sales. The asset turnover ratio formula is equal to net sales divided by the total or average assets of a company. A company with a high asset turnover ratio operates more efficiently compared to competitors with lower ratios.
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