Investments, tenth edition

 

 

  Turnover and Other Asset Utilization Ratios 

 It is often helpful in understanding a firm’s ratio of sales to assets to compute comparable 

efficiency-of-utilization, or turnover, ratios for subcategories of assets. For example, we 

can think about turnover relative to fixed rather than total assets:   

Fixed-asset turnover

5

Sales

Fixed assets

 

This ratio measures sales per dollar of the firm’s money tied up in fixed assets. 

 To illustrate how you can compute this and other ratios from a firm’s financial state-

ments, consider Growth Industries, Inc. (GI). GI’s historical income statement and opening 

and closing balance sheets for the years 2010–2013 appear in  Table 19.9 .