What Is Asset Performance?
Asset performance refers to a business' ability to take operational resources, manage them, and produce profitable returns. A business can coax a positive performance out of its assets resulting in positive company performance. Ratios and metrics that measure how quickly operations in the company lead to revenue and how efficiently operations are being run are often used to measure asset performance. Asset performance is typically used to compare one company's performance over time or against its competition. Possessing strong asset performance is one of the criteria for determining whether a company is considered a good investment.
Understanding Asset Performance
Asset performance refers to the way a business can manage the use of its operational resources. Certain metrics and ratios can measure the use of resources. Analysts rely on these metrics and ratios to compare the asset performance of many companies across an industry. Analysts use metrics like the cash conversion cycle, the return on assets ratio, and the fixed asset turnover ratio to compare and assess a company's annual asset performance. Typically, an improvement in asset performance means that a company can either earn a higher return using the same amount of assets or is efficient enough to create the same amount of return using fewer assets.