question archive What can it mean for a company or business to have an asset turnover of 1
Subject:FinancePrice:2.86 Bought7
What can it mean for a company or business to have an asset turnover of 1.5; ROE of 8.7%; ROA of 4.4%?
Sales/Assets=1.5
Net Income/Assets=4.4%
=>Profit Margin=Net Income/Sales=4.4%/1.5=2.9333%
RoE=Net Income/Equity
RoA=Net Income/Assets
RoE/RoA=Assets/Equity
=>Assets/Equity=8.7%/4.4%=1.98
For 1$ of assets, the company is generating 1.5$ of sales, 0.044$ of net income (net profit margin of 2.9333%), 0.51$ of equity, 0.49$ of debt