Asset turnover Essays

B. Total Asset Turnover “The asset turnover ratio is an efficiency ratio that measures a company’s ability to generate sales from its assets by comparing net sales with average total assets” (Asset Turnover Ratio 2018). In other words, financial managers utilize the total asset turnover (TATO) to determine the company’s ability to efficiently utilze its assets to generate revenues. In addition, investors and creditors utilize TATO to better understand a company’s management style as well as

average current ratio is .98 and average acid test ratio is .55. These averages are below the average in comparison to the Cheesecake Factory average current ratio is 2.5 and average acid test ratio is 2.2. Therefore, Cracker Barrel has enough current assets to cover their liquidity ratio, so they are providing themselves an excellent financial stability. Above all, the current ratio and acid test ratio includes immediate access to convert to cash. On the other hand, Cheesecake Factory has a financially

measures a firm's ability to pay off its short-term liabilities with its current assets”(myaccountingcourse). After the expansion corporations current ratio has decreased from 2.33 times of current assets to 1.17 current assets. Where the industry average is 2.7(Table1).

If we look at the ratios, the financial health of Modern Technology has worsened slightly in financial year of 2015 as compared to financial year of 2014. We will look at current ratio, acid test ratio, inventory turnover ratio and receivable turnover ratio to examine Modern Technology’s liquidity as a company over the two years. Current ratio: Modern Technology’s current ratio improved slightly from year 2014 to year 2015. A higher current ratio is desirable because it shows that Modern Technology

Liquidity Liquidity is defined as the ability to convert assets quickly into to cash (Liquidity, 2014). A good standing liquidity is good for companies as well as investors and lenders to the company. For the company it’s a great indication as to whether it will meet short term maturing obligations or not. For creditors and investors, a good standing liquidity portrays the ability of how quick a company can pay off debts. Current Ratio (Current assets ÷ Current liabilities) The current ratio (working-capital

measure the company's ability to pay off its short-term debts as they come due by using the company's current or quick assets, • Current ratio= current assets current liabilities AVP= 1.34 ULTA= 2.9 REVLON= 15.86 • Quick ratio = ( current assets - inventory) current liabilities AVON= .94 ULTA= 1.12 REVLON= 15.26 The safe rate for current ratio is 1 or up, that means the current assets can cover the current liabilities, we see that the current ratio for AVP is 1.34 which means it is it has ability to

ratio Current ratio=current assets/current liabilities Current ratio 2001 2000 A-Tech 1.16 0.95 Bi-Sci 2.25 2.17 Quick ratio=current assets –inventories/current liabilities Quick ratio 2001 2000 A-Tech 0.57 0.45 Bi-Sci 1 0.92 Interpretation: Current ratio is the ratio in which current assets divided by current liabilities. Bi-Sci Company has more liquidity as compared to A-tech Company. Activity ratio: Receivable turnover=credit sales/receivables Receivable turnover 2001 2000 A-Tech 31.7 45 Bi-Sci

A low turnover implies excess inventory, a high ratio shows good sales. High inventory levels are unhealthy because they represent an investment with a rate of return of zero. In the case of copper mining there is a unlikelihood of a high ratio for inventory turnover because as it’s mined it goes out the door. The industry average is 41.66day for inventory turnover, Newmont is a faster turnover at 21 Days and Freeport is slightly longer at 52days.

current ratios, O’Reilly Automotive Inc. can pay off more of its current debt than AutoZone can. O’Reilly also has more liquid assets to cover its liabilities than AutoZone which is why O’Reilly’s quick ratio is larger. Both companies have a small cash ratio, but AutoZone has more cash to cover its short term debt. Both companies also have a negative NWC to Total Assets Ratio, which means that they have too many current liabilities, which in turn reduces the amount of working capital available. However

traded corporation PetSmart. Our focus in this second discussion of PetSmart will be on the items considering inventory methods used, value of inventory, purchase prices, expenditures, initial cost of merchandise, gross profit calculation, inventory turnover for year ended Feb, 2nd 2014 as well as comparing PetSmart’s ratios to industry averages which are currently 41% and 7.7 times. In hopes to make a good estimate of PetSmart’s over all worth to allow our organization to make concise and effectively

McDonald Corporation’s average return on total assets is 14.97% during the 3-year period, with slight decrease in 2013 and notable decrease in 2014. The gross margin remains stable and the average is 66.20%. The average profit margin ratio is 28.39%, with a sharp decline from 29.38% to 26.19% respectively. These two ratios reflect the profitability of McDonald’s. The figures indicate that McDonald’s Corporation’s ability of making profits out of assets is weakening, but it still remains at a high level

Current ratio shows the ratio between the current assets and current liabilities and shows the ability of the company to meet its current liabilities out of its current assets. The liquidity position of the company is sound as it is maintaining the constantly the current ratio of around 1.6 and it is also at par with the industry average of 1.6. Further, quick ratio is also one of the ratios to assess the soundness of the liquidity position of the company. The quick ratio is also at par with the

Current Assets/Current Liabilities Current Assets= 260,478/45,558 = 5.72:1 This ratio was selected to help evaluate Port Everglades’ liquidity in the short-term. For 2014 for every dollar of liabilities that Port Everglades, there is $5.72 of current assets. This means that Port Everglades has the ability to cover more than 5 times the number of liabilities and can easily cover any of its short term debts. It also means that Port Everglades will still have a positive balance of its assets following

current ratios were greater than 1 meaning that if the company was to liquidate they would be able to pay 100% of their current liabilities with their current assets. In 2017 the current ratio went down to .94 which means they have more current liabilities than current assets. The Acid Test ratio shows if a company has enough quick assets to cover its current liabilities. Targets Acid Test ratio went from up from 2015 to 2016 and back down to a .20 for 2017. Having such a low ratio can mean that

Inventory Turnover is a measure of how quickly the company is selling their goods (Investopedia). The inventory turnover is a measure of the sales of a company divided by the company 's inventory for a specified period. Ford Motor Company had sales of 144,077,000,000 and inventory of 7,866,000,000 giving an inventory turnover of 144,077,000,000/7,866,000,000=18.31 (Ford Motor Company, 2015, pp. 27, FS-4). This shows that Ford Motor Company had a high volume of sales in 2014. Similarly, General Motors

current liabilities without selling its inventory. Inventory Turnover measures the number of times Company G sells its inventory during a year, whereby a high ratio would indicate a high rate of turnovers and subsequent easiness in selling inventory. In 2012, the company’s inventory ratio decreased from 6.1 to 5.2, a ratio value below the 3rd quartile of 8.3 indicating weakness. However, this rate was similar to the standard inventory turnover ratio set by the Home Centers Retail Benchmark at 5.2, indicating

503 / 574,565 = 2.04 to 1 The current ratio is a liquidity test that correlates current assets and current liabilities. It is formulated by dividing the current assets by the current liabilities. Should a company have period where the fund flow became uneven with the working capital (Bethel University, 2011). The current ratio for Sally Beauty Holdings, Inc. 2.04 to 1, meaning the have $2.04 in current assets for every dollar in current liabilities. Some analyst may consider this to be slightly

TOTAL ASSETS TURNOVER RATIO This ratio is useful to determine the amount of sales that are generated from each dollar of assets. As noted above, companies with low profit margins tend to have high asset turnover, those with high profit margins have low asset turnover. Cory's Tequila Co.'s asset turnover seems to be relatively low, meaning that it makes a high profit margin on its products. For companies in the retail industry you would expect a very high turnover ratio - mainly because of cutthroat

much current asset one firm has against its one dollar worth of current liabilities. It shows us how efficiently and quickly one firm can convert its assets into cash paying the short term liabilities. From the table, we can see that at the year of 2017 RAK Ceramics Ltd. has a current ratio of 1.97. Current ratio shows us how much current assets the firm has against its current liabilities. However, too much current ratio means there’s is idle assets available and the use of assets is inefficient

margin  Asset Turnover  Return on Asset  Return on Equity  Debt to Equity Ratio  Equity Multiplier Figure 2: Ratio Results Section 2 Identifying five external factors that impacted on BCX’s performance the previous five years. 2.1 Profit margin Simply defined as