What Is Walgreen's Fixed Asset Turnover Ratio?
- A Good Sign of Asset Turnover
- Fixed Asset Turnover
- A Fixed Asset Turnover Ratio for Efficient Management
- A Denominator for a High Turnover Property
- A FAT-Based Analysis of a Company's Investment
- Should the Fixed Asset Turnover Ratio be High or Low?
- Fixed Asset Turnover Ratio
- The Asset-to-Asset Ratio of Companies
- Non-current assets represent a large part of the total company resources
A Good Sign of Asset Turnover
The asset turnover is how quickly a company turns over its assets. Revenue is divided by Total Assets. Walgreens Boots Alliance's revenue for the three months ended in August was $34,262 mil.
The Walgreens Boots Alliance's total assets were $86,603 mil. Walgreens Boots Alliance's asset turnover was 0.40 for the quarter that ended in August. Du Pont Formula has a link to asset turnover.
The Walgreens Boots Alliance's ROE was 11.02% for the quarter that ended in August of 2011. It is linked to the percentage of return through Du Pont Formula. The Walgreens Boots Alliance's annual ROA % was 2.90% for the quarter that ended in August.
Fixed Asset Turnover
The amount of company revenues over the amount of fixed assets is called fixed asset turnover. A turnover of nine means that a company's fixed assets are generating more revenue than their fixed assets.
A Fixed Asset Turnover Ratio for Efficient Management
A fixed asset turnover ratio is a good way to measure how efficiently a company uses its fixed assets. The more efficient the ratio is. To be truly insightful, one needs to measure the trend of the ratio over time or compare it against a benchmark for a specific industry.
A Denominator for a High Turnover Property
It is normal for owners and borrowers to combine the starting and finishing balances and divide by two to use an average net asset number for the denominator. A high turnover means that assets are being used effectively and that a lot of revenues are coming from a small number of assets. That may mean that the firm has begun to use outsourcing after selling off its equipment. The cost in facilities will be lowered by outsourcing.
A FAT-Based Analysis of a Company's Investment
If you see a company with a higher FAT, it's likely that they've used the investments to generate sales. The fixed asset balance helps calculate the accumulated depreciation.
Should the Fixed Asset Turnover Ratio be High or Low?
Should the fixed asset turnover ratio be high or low? A high ratio indicates that a company uses its fixed assets to generate sales, while a low ratio indicates that the firm doesn't use its fixed assets to generate sales.
Fixed Asset Turnover Ratio
The fixed asset turnover ratio is an efficiency ratio that shows how well a company uses its fixed assets. It is calculated by dividing net sales by the total of the property, plant, and equipment. The asset turnover ratio could be low if efficiency is improved.
The Asset-to-Asset Ratio of Companies
Firms in sectors such as utilities have large asset bases. Selling assets to prepare for declining growth artificially inflates the ratio. When they are made for different companies, they carry more meaning.
The asset turnover is the sales of a company to its assets. The ratio is used by third parties to evaluate the operations of a business. A company with a high total asset turnover can operate with less assets than a less efficient competitor, and so requires less debt and equity to operate.
The result should be a bigger return to its shareholders. It is best to plot the ratio on a trend line to see changes over time. It is possible to see which other companies are being more efficient inwringing more sales from their assets by comparing it to the same ratio for competitors.
The measure assumes that additional sales are good when in reality they are not. A high turnover ratio does not result in more profits. The ratio is only useful industries that involve the production of goods.
The ratio is less relevant in the services industry because it has a far smaller asset base. A ratio of 1 means that the net sales of a company are in line with the average assets of the company. The company is generating 1 dollar of sales for every dollar invested in assets.
Non-current assets represent a large part of the total company resources
A company's total resources are often represented by non-current assets. They are recorded in the balance sheet and held into the long-term by the business with the intention of producing long-term economic benefits.
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