Applied Materials Inc (AMAT)

Total asset turnover

		Oct 29, 2023	Oct 30, 2022	Oct 31, 2021	Oct 25, 2020	Oct 27, 2019
Revenue	US$ in thousands	26,274,000	25,590,000	22,827,000	16,962,000	14,608,000
Total assets	US$ in thousands	30,729,000	26,726,000	25,825,000	22,353,000	19,024,000
Total asset turnover		0.86	0.96	0.88	0.76	0.77

October 29, 2023 calculation

Total asset turnover = Revenue ÷ Total assets
= $26,274,000K ÷ $30,729,000K
= 0.86

Total asset turnover measures a company's efficiency in utilizing its total assets to generate revenue. It is calculated by dividing net sales by average total assets. A higher total asset turnover indicates better utilization of assets to generate sales.

Applied Materials Inc.'s total asset turnover has fluctuated over the past five years, ranging from 0.77 to 0.96. In 2023, the total asset turnover decreased to 0.86 from the previous year's 0.96. This indicates that the company generated $0.86 in revenue for every dollar of average total assets in 2023, compared to $0.96 in 2022. The decrease suggests a slightly lower efficiency in asset utilization to generate sales.

Looking at the trend, in 2021, the total asset turnover was 0.89, showing a decrease from the prior year. However, the ratio increased to 0.89 in 2021 from 0.77 in 2020, indicating improved asset turnover efficiency. The relatively stable ratio in 2019 and 2020 reflects consistent asset utilization to generate revenue.

It is essential to further investigate the factors contributing to the fluctuations in total asset turnover. A decline in this ratio may be concerning if it is due to a decrease in sales relative to total assets. Conversely, an increase suggests better efficiency in asset utilization. It would be valuable to compare this ratio with industry benchmarks and peer companies to gain further insight into Applied Materials Inc.'s asset efficiency and competitiveness.