Asset Utilization:

Asset utilization is a measure of the amount of assets essential to generate income. Two such measures are

Return on Total Assets = (Net Income + [(Interest Expense × 1 - Tax Rate)])/ Average Total Assets

Asset Turnover = Net Sales / Average Total Assets                

Where overall assets average is the average of the assets at the straining of the year and at the end of the year. Both measures are derived from the total-asset figure on the balance sheet, and from the net income and interest expense figures on the income statement. Both measures eliminate the usual motivation to optimize profit on the income statement at the expense of rising inventory on the balance sheet.