Average Total Assets

Definition: Average Total Assets is the simple arithmetic average of beginning and ending Total Assets for a reporting period: (Beginning Total Assets + Ending…

Average Total Assets is the simple arithmetic average of beginning and ending Total Assets for a reporting period: (Beginning Total Assets + Ending Total Assets) / 2. It is used as the denominator in ratios that pair an income-statement (period) measure with a balance-sheet (point-in-time) measure, such as Return on Assets and Asset Turnover. Averaging smooths out point-in-time fluctuations and produces a more representative measure of the asset base used to generate earnings or sales during the period.