Management of Assets - Part 2

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Del curso dictado por Emory University

Finance for Non-Financial Managers

57 calificaciones

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Emory University

Finance for Non-Financial Managers

57 calificaciones

Finance is for “Non-financial Managers” who want to understand key financial principles and apply them in a real-world context. Over the course of the program window, you will work your way through a series of nine modules that move from understanding basic financial principles to applying financial analysis and ratios to drive decisions. In addition, each module is capped with an ending self-evaluation to ensure that you have absorbed the following key learning objectives: + Understand the language associated with finance + Know how and when to use financial terms and analysis techniques + Read and assess company performance using financial statements + Recognize the link between organizational strategy and financial objectives + Use "the numbers" to your best advantage to make more informed decisions

De la lección

Valuation Ratios

This module will discuss effective tax rates, valuation ratios, and management of assets.

Effective Tax Rate3:13

Management of Assets - Part 18:02

Management of Assets - Part 23:42

Management of Assets - Part 32:53

Management of Assets - Part 46:47

Management of Assets - Part 53:16

Conoce a los instructores

Thomas Smith
Assistant Professor in the Practice of Finance
Goizueta Business School

One of the other management ratios that we should be concerned about and

we should be looking at, is a thing called the asset turnover ratio.

The asset turnover ratio is the ratio of sales to total assets,

it's really important.

What this tells us is how do we turn the ownership

of something the company has into a dollar worth of sales.

It identifies whether or not, as a company, we own the right kind of things.

So the asset turnover ratio is sales to total assets.

So let's look at where we get this information here.

Our sales are going to come from our income statement.

Top line right there, 61,494.

Our total assets come from our balance sheet right here.

Total assets of 38,599.

So we've got sales of 61,494 and

total assets of 38,599.

Use my handy dandy calculator,

61,494 divided by 38,599 and

we have ourselves 1.59.

I will show you these

calculations right here,

61,494/38,599 = 1.59.

What this says is that I can take each dollar worth of assets that I

have as a company and turn into almost $1.60 worth of sales.

Certainly better than one to one.

How do we compare to other companies in this same time period?

Apple is one to one in this area during 2011, as is HP.

The industry is slightly better than this at 1.78, but the sector 0.45.

So the sector is only able to generate $0.45 on the dollar for

the assets that it owns.

Apple is only able to translate each dollar of assets into a dollar

worth of sales, where Dell is able to translate a dollar worth

of assets into almost $1.60 worth of sales.

Once you start looking at the numbers,

you get a sense about where Dell is putting their strategy.

Yes, their profit margins are a little bit lower.

They are though able to acquire the right type of assets and

these assets generate more sales than their comparable counterparts.

What I would like you to do is go look at the income statement and

the balance sheet for your company, or a company that works in the same industry as

your organization, and calculate your asset turnover ratio.

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