Equity Turnover

How much revenue the owners’ capital generates. Together with return on sales it explains return on equity: ROE ≈ return on sales × equity turnover, before the difference between operating and net profit.
Finance
Efficiency

Equity Turnover formula

\[ \dfrac{\text{Revenue}}{\text{Average equity}} \]

Terms

  • Equity, average of opening and closing: Owners’ stake: share capital, reserves and retained earnings, including the current year’s result.
  • Revenue, period total: Net sales of goods and services for the period, after discounts and allowances.

Result

Equity Turnover is a ratio. Higher is better.

Target

There is no general target; compare with the company’s own history and with peers in the same industry.

Equity Turnover in Business Central

Equity (average of opening and closing)

  • Every income statement account
  • Category Equity (14) and every category below it

141 posting accounts in total.

The full account list is on the Equity page.

Revenue (period total)

13 posting accounts in total.

The full account list is on the Revenue page.

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