![]() The table below gives their data for the year 2021-2022 (in millions). We take the example of SABIC (Saudi Basic Industries Corporation ) and Dow Chemical Company. Take a practical example of two companies operating in the petrochemical industry. However, it’s important to note that various factors can influence Amazon’s asset turnover ratio, such as the company’s size, product mix, and competitive landscape, which may differ from other e-commerce companies. It suggests that Amazon generates less revenue per dollar of assets than the industry average. The industry average asset turnover ratio for e-commerce businesses is 1.5. Step #2 Calculate the asset turnover ratioĪmazon has a 1.16 asset turnover ratio, meaning it generates $1.16 for each $1 asset it owns. Step #1 Calculate the average total assetsĪverage Total Assets = (Total Assets for the year 2021 + Total Assets for the year 2022) / 2 (Image Source: Amazon Annual Report 2022)įirst, we will calculate the average total assets and then the asset turnover ratio. We get the data for the year 2021-2022 from its annual report (its income statement and balance sheet). Let us determine the asset turnover ratio for Amazon Inc. Let us look at a few real company examples like Amazon, SABIC, etc. It indicates that the company does not have an efficient asset management system. Thus the company’s asset ratio turnover is lower than the industry average. Hailey’s restaurant earns $1.57 for each dollar it has in assets. Let us calculate its asset turnover ratio. Hailey owns a restaurant named Taste the Best and wants to determine its efficiency in generating sales using its assets (restaurant building, equipment, inventory, etc.). It signifies that the company has efficient asset management. Thus the company’s asset ratio turnover is higher than the industry average. In the retail industry, the asset turnover benchmark is 2.5. ![]() has invested in assets, it generates $4 in sales. The asset turnover ratio of 4 indicates that for every $1 Dynamic Firms Ltd. ![]() Asset Turnover Ratio = Net Sales / Average Total Assets ![]()
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