﻿[Script Info] Title: [Events] Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text Dialogue: 0,0:00:05.83,0:00:09.71,Default,,0000,0000,0000,,The asset turnover ratio\Nis a measure of a company's ability Dialogue: 0,0:00:09.71,0:00:12.70,Default,,0000,0000,0000,,to use its assets \Nto generate sales or revenue, Dialogue: 0,0:00:12.70,0:00:15.18,Default,,0000,0000,0000,,and is a calculation\Nof the amount of sales Dialogue: 0,0:00:15.18,0:00:17.95,Default,,0000,0000,0000,,or revenue generated\Nper dollar of assets. Dialogue: 0,0:00:17.95,0:00:20.95,Default,,0000,0000,0000,,The formula \Nfor the ratio is as follows: Dialogue: 0,0:00:20.95,0:00:24.63,Default,,0000,0000,0000,,Sales or Revenues\N÷ Total Assets Dialogue: 0,0:00:24.63,0:00:27.58,Default,,0000,0000,0000,,A higher number is preferable,\Nsince it suggests that Dialogue: 0,0:00:27.58,0:00:31.12,Default,,0000,0000,0000,,the company is using its assets\Nefficiently to make money. Dialogue: 0,0:00:31.12,0:00:34.05,Default,,0000,0000,0000,,A lower number may convince \Na company to try other methods Dialogue: 0,0:00:34.05,0:00:37.30,Default,,0000,0000,0000,,to help maximize\Nthe efficiency of its assets. Dialogue: 0,0:00:37.30,0:00:40.69,Default,,0000,0000,0000,,Nevertheless, this ratio \Nvaries between industries, Dialogue: 0,0:00:40.69,0:00:42.88,Default,,0000,0000,0000,,and can only be\Ncompared effectively Dialogue: 0,0:00:42.88,0:00:45.32,Default,,0000,0000,0000,,between businesses\Nin the same sector. Dialogue: 0,0:00:45.32,0:00:48.78,Default,,0000,0000,0000,,Asset turnover is usually\Ncalculated annually, Dialogue: 0,0:00:48.78,0:00:51.29,Default,,0000,0000,0000,,either for the fiscal,\Nor calendar year. Dialogue: 0,0:00:51.29,0:00:55.03,Default,,0000,0000,0000,,The total assets may also be\Nthe calculated average of assets Dialogue: 0,0:00:55.03,0:00:57.85,Default,,0000,0000,0000,,at the beginning,\Nand end of the year. Dialogue: 0,0:00:57.85,0:01:02.48,Default,,0000,0000,0000,,For example, X-Eyes Mart has \Nan asset base of \$400,000,000 Dialogue: 0,0:01:02.48,0:01:04.35,Default,,0000,0000,0000,,at the beginning \Nof its fiscal year. Dialogue: 0,0:01:04.35,0:01:08.22,Default,,0000,0000,0000,,The company sees its asset base\Nincrease to \$500,000,000 Dialogue: 0,0:01:08.22,0:01:09.89,Default,,0000,0000,0000,,by its fiscal\Nyear end, Dialogue: 0,0:01:09.89,0:01:15.69,Default,,0000,0000,0000,,which means that it had an average of\N\$450,000,000 in assets for the fiscal year. Dialogue: 0,0:01:15.69,0:01:17.53,Default,,0000,0000,0000,,During that same\Nfiscal year, Dialogue: 0,0:01:17.53,0:01:20.84,Default,,0000,0000,0000,,the company generated\N\$250,000,000 in revenues. Dialogue: 0,0:01:20.84,0:01:24.89,Default,,0000,0000,0000,,Thus, the asset turnover ratio\Nis \$250,000,000 Dialogue: 0,0:01:24.89,0:01:29.85,Default,,0000,0000,0000,,divided by \$450,000,000 \Nequals 0.56. Dialogue: 0,0:01:29.85,0:01:34.94,Default,,0000,0000,0000,,Since X-Eyes Mart is a big-box retailer\Nthat sells clothing and household goods, Dialogue: 0,0:01:34.94,0:01:40.17,Default,,0000,0000,0000,,its asset turnover of 0.56 is below\Nthe retail industry standard. Dialogue: 0,0:01:40.17,0:01:42.79,Default,,0000,0000,0000,,Asset turnover ratios \Nshould be higher Dialogue: 0,0:01:42.79,0:01:45.49,Default,,0000,0000,0000,,for companies \Nin consumer staples sectors, Dialogue: 0,0:01:45.49,0:01:48.98,Default,,0000,0000,0000,,since these businesses\Ntend to have small asset bases, Dialogue: 0,0:01:48.98,0:01:52.40,Default,,0000,0000,0000,,but a high volume of sales \Ndue to competitive pricing. Dialogue: 0,0:01:52.40,0:01:53.82,Default,,0000,0000,0000,,For comparison's \Nsake, Dialogue: 0,0:01:53.82,0:01:59.65,Default,,0000,0000,0000,,the retail giant Wal-Mart \Nhad an asset turnover of 2.37 in 2012. Dialogue: 0,0:01:59.65,0:02:02.21,Default,,0000,0000,0000,,As a result, \NX-Eyes Mart CEO, Dialogue: 0,0:02:02.21,0:02:05.20,Default,,0000,0000,0000,,Rip Smiley decides\Nto restructure the company Dialogue: 0,0:02:05.20,0:02:08.55,Default,,0000,0000,0000,,in order to \Nimprove efficiency.