Notes On Asset Turnover Ratio - 1337 Words

ASSET TURNOVER RATIO Asset turnover ratio is the ratio of the value of a company’s sales or revenues generated relative to the value of its assets. The Asset Turnover ratio can often be used as an indicator of the efficiency with which a company is deploying its assets in generating revenue (investopedia.com). Asset Turnover = Sales or Revenues / Total Assets. The asset turnover ratio for barratt developments 2016 is 66% which is a 2.4% increase from 2015 , while the Berkeley group’s asset turnover ratio has gone down from 62.2%(2015) to 53.3%(2016). This indicates that Barratt developments PLC are using their assets more efficiently and it also indicates that for every pound barratt development is spending in Assets it is generating†¦show more content†¦It tells the company how fast inventory is turning over at one company compared to another, The faster a company can sell inventory for a profit, the more profitable it is (investopedia.com). Barratt developments had an inventory holding period of 460 days in 2016 and of 500 days in 2015, this can be due to barratt developments carrying out various projects at once and so the inventory period was smaller.The Berkeley group had an inventory holding period of 883 days in 2016 and of 690 days in 2015,this can be due to the berkeley group carrying out lesser projects during both the years and so the inventory period was a longer one (Barratt and Berkeley annual report). TRADE CREDITORS PAYMENT DAYS The creditor payment period is a metric that tells how much time a company takes to pay off short term debts to its creditors. The trade creditors payment period for Barratt developments was 161 days in 2016 and 162 days in 2015 and the berkeley group’s creditor payment period was 480 days in 2016 and 391 days in 2015. Barratt development had a very good creditor payment period and this can be due to barratt having  £3.3m in accruals and deferred income and other payables classified under as current liabilities comprise payments received on account and amounts due to related parties, therefore barratt developments did not take much time to pay off their debtors and also they had more cash inShow MoreRelatedDeep river1114 Words   |  5 Pagesï » ¿Review of Financial Statements and Ratios I. Basic Financial Statements A. Income Statement - summary of firm’s accounting revenues, expenses, and profits over some time period Ex. = see Consolidated Statements of Income for Dell Inc. from the 10-k filed with SEC for fiscal 2005 B. 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