Question 4: Calculate the total asset turnover, the P, P, & E Turnover, and the intangible asset turnover for each of the past two years. Are these turnover ratios increasing or decreasing? What might explain these trends?
Total Asset Turnover is a financial ratio that measures the efficiency of company’s use of its assets to product sales. It is a measure of how efficiently management is using the assets at its disposal to promote sales. The ratio helps to measure the productivity of a company’s assets. Total Asset Turnover is calculated by Net Sales divided by Total Assets.
We had to calculate the Total Asset Turnover, the Property, Plant, and Equipment Turnover, and the Intangible Asset Turnover Ratios in 2010 and 2011 for Johnson and Johnson Company. The below table shows the above ratios in 2010 and 2011.
| |2010 |2011 | |Total Asset Turnover = |61,587 = |60% |65,030 = |57% | | |102,908 | |113,644 | | | | | | | | |P, P, & E Turnover = |61,587 = |4.23x |65,030 = |4.41x | | |14,553 | |14,739 | | | | | | | | |Intangible Asset Turnover = |61,587 = |1.92x |65,030 = |1.89x | | |32,010 | |34,276 | |
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