Asset management ratios

Investors, lenders, and management are concerned with a company s asset base. Does the firm have too many assets or too few assets Are the assets employed to generate an appropriate return for stockholders Not having the ideal amount of assets, either too many or too few, negatively affects cash flow and stock price. Companies strive to have an ideal amount of assets given their expectation of future sales. Too few assets and firms lose sales too many assets and firms incur unnecessary costs. Asset management ratios evaluate how efficiently a company uses its various resources. 

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Leverage ratios a measure of a company s overall debt burden Activity ratios a measure of how effectively a company manages its assets Profitability ratios an indication of a firm s total operating performance, which is a combination of asset and income management... 

Fixed asset turnover ratio evaluates how efficiently management uses fixed assets. Remember fixed assets include those with long useful lives, such as property, plant, and equipment that are used in the production of goods (PP E). As shown here, PepsiCo generates just more than 3.50 for each dollar it has in fixed assets. 

Total assets turnover ratio measures how efficiently management generates sales given the total asset base provided. A low ratio would... 

More recently, an MILP formulation has been reported for designing a SC luider demand uncertainty, which simultaneously considers different liquidity, assets management, profitability, and solvency ratios (Longinidis and Georgiadis 2011). 

Activity ratios are a measure of how effectively a firm manages its assets. There are two inventory/turnover ratios in common use today. The inventory/sales ratio is found by dividing the inventory by the sales. Another method is to divide the cost of sales by inventory. The average collection period measures the number of days that customers invoices remain unpaid. Fixed assets and total assets turnover indicate how well the fixed and total assets of the firm are being used. 

Table 9.11 calculates the current ratio for the Blue and Gold companies. Although both companies have 100,000 more of current assets than current liabilities (working capital), the current ratio varies substantially. The Blue company s management has twice as many assets to pay for the current... 

A wider method of evaluating a firm s efficiency is the rate of return on total assets. Because the accounting equation requires that total assets equal the sum of fofal liabilities and total stockholder s equity, this ratio provides a measure of fhe firm s efficiency at managing both stockholder and creditor investments ... 

The current ratio is defined as the current assets divided by the current liabilities. It is a measure of the company s overall ability to meet obligations from current assets. Today a comfortable level of between 1.5 and 2 is considered adequate. (Note Numbers presented in this section are typical as of 1999 but will vary depending on the company s style of management.)... 

Activity ratios are measures of how effectively a company manages its assets. They are based on the assumption that there are proper relationships between a company s assets and the sales and income that the assets generate. Different methods are used to generate these ratios, and they depend on how a person wants to use the ratios. Most analysts compile average ratios from balance sheet data, which are end-of-year data. In this section and in the financial ratio example that follows, this method is used. 

Activity ratios are used to determine the company s management of assets, while profitability ratios help to evaluate its income management. 

The activity ratios are average for a company in the CPI, and the company manages its assets effectively. 

Financial ratios often used by analysts were introduced because they are indicators of how well the company uses its assets and how well management performs. An equation for determining the Z score was introduced. It measures how the position of a company with respect to the brink of bankruptcy. 

Activity ratios measure how effectively a company manages its assets. 

Profitability ratios indicate a firm s management of both income and assets. 

The return-on-equity ratio is the net income after taxes and interest divided by the stockholders equity. It sometimes is called the return on net worth, and this ratio is probably the best measure of management s performance. Returns on equity vary depending on company performance, but a figure of 15% is not um-easonable. The return-on-total assets ratio is the net profit after taxes divided by the total assets expressed as a percentage. It reflects the overall return that a company has earned on its assets a reasonable value is about 10%. 

Measures from the first level approach to supply chain management in order to assess, and the relevant parameters from the second and third contain more specific and detailed criteria for the categories and components processes. Indicators of the level of the first SSC (2006) divided into five operational criteria, of which three, reliability, flexibility and speed of response, are directed to the attributes of the client, and the other two, expenses and assets are used to measure inside the company. Each of these measures is further divided into small ratios at lower levels. 

CDFR is a pool-type SFR with a preliminary designed thermal power of 2100 MW and an electrical power of 870 MW. Mixed oxide (MOX) is used as the fuel, and sodium is the main coolant. The reactor is a three-loop, three-circuit design, and there is only one set of steam turbine generators. Fig. 14.5 shows the preliminary core layout of the CDFR (Yang et al., 2007). It was planned to be constructed in Xiapu, Fujian province, under the cooperation of the China National Nuclear Corporation (CNNC), the Fujian Investment and Development Group, and the Xiapu state-owned assets investment management company with the investigation ratio of 51 40 9. 

Assets have two components (1) how they are bought and financed, and (2) how efficiently they are operated. When measuring managers use of assets to generate a profit, it is beneficial not to include how the assets were financed. Dollars earned (net income) for ROA is an after interest and tax amount. To remove the interest and tax impact, use the basic earnings power (BEP) ratio. 

Companies and management are evaluated on many outcomes and operations functions can directly impact a company s financial performance. Companies are evaluated on their ability to pay current bills, profitability, management of assets and debts, and the valuation of the company. Operations and supply chain managers have a significant impact on a company s cash flow, profitability, debt burden, utilization of assets, and its ability to remain in business. Operational decisions and actions will be reflected on a company s financial statements and subsequent performance ratios. Table 4.5 provides a summary of the performance ratios that were introduced in this chapter. 

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