The Financial Analysis of Wesfarmers Limited - Case Study Example

Executive Summary Wesfarmers Limited and has been successful as retail players. Their market has grown which is reflected by the growth in sales. There is even scope for the company to move further as this sector is showing improvement. The financial analysis also highlights some important fact related to liquidity and capital structure. The findings shows the positives and negatives of both based on financial analysis. The ratios like liquidity ensures to find liquidity and the capital financed by the company are demonstrated by capital structure ratios. The efficiency ratio indicates the area where Wesfarmers need to work on. The capital market ratio indicates the companies which are favoured by shareholders and also help to look into the future prospects of the company. The recommendations highlights areas where both the companies need to improve which will help them face competition and help in proper strategy execution. The analysis shows that Wesfarmers performance has improved drastically in 2009. It still needs to work on certain areas to stay ahead of competition and Wesfarmers need to inculcate those so that it is able to withstand competition and capture a bigger market. Content Introduction 3 Financial Analysis 3 Liquidity ratio 3 Capital Structure ratio 6 Profitability Ratios 8 Asset Efficiency Ratios 12 Market Performance Ratio 16 Trend Analysis 19 Findings 20 Conclusion 21 Recommendations 21 Limitations 22 References 23 Appendix 25 Introduction Wesfarmers Limited is a retail giant. The company has a huge presence and deals in “home improvement, office supplies, insurance, food, liquor, coal and other products”. (Wesfarmers Website, 2010) The fact that the company deals in so many products and huge reach has given a wide market. The company has a presence in supermarkets, malls, departmental stores and provide the basic necessities for people thereby enabling them to grow. The financial statement of both the companies reveals so. Even the share prices shows improvement. With more consumers moving towards supermarkets gives an opportunity to expand in overseas. Financial Analysis Financial analysis is very important for all business. Analyzing the statement helps in “planning, budgeting, monitoring, forecasting and improving the financial performance by taking vital decision”. (Micro Strategy, 2010) Proper analysing helps a long way to “understand the financial health”. (Micro Strategy, 2010) It helps to identify trends and compare with competitors and industry to gain advantage. The following is the ratios for Wesfarmers Limited. Liquidity Ratios This ratio plays an important part and helps “to identify the firms ability to meet its short term obligations and plays a huge role in the performance”. (Financial Modelling Guide, 2010) The ratios for Wesfarmers are Cash Flow Ratio: It is defined as “the ability of the firm to meet the current liabilities out of its operating activities”. (Financial Modelling Guide, 2010) It is calculated as “Net Cash from Operating Activities / Current Liabilities X 100”. The ratios is as follows The graph for the same looks as follows The ratio for Wesfarmers has improved in 2009 over 2008. It shows that the ability of Wesfarmers to pay its current bills has improved.. It is placed better compared to 2007 and 2008. Wesfarmers need to ensure that the operating activities contribute more as it suggests the line of business the company is in and the ability to meet its current obligations from those. Current Ratio: “It measures the ability to pay the short term liabilities out of short term assets”. (Financial Modelling Guide, 2010) This ratio helps creditors, suppliers and investor to identify the liquid position. It is calculated as “Current Assets / Current Liabilities”. The current is as The graph for the same looks as follows The ratio shows that Wesfarmers has a better liquidity position in 2009 over the previous year. Wesfarmers need to further improve the ratio as it is a concern as the short term obligations are higher. This might make investors and suppliers stay away. The positive for Wesfarmers is that they have improved it drastically. They need to work more and ensure that it reaches around 2. Quick Ratio: It is also known as acid test ratio. “It measures the ability of the firm to meet its short term obligation when inventories are removed as inventories take some time to be converted into cash”. (Financial Modelling Guide, 2010) It is calculated as “(Current Assets – Inventories) / Current Liabilities”. The ratios is as The graph for the same looks as follows The ratio also indicates that Wesfarmers is better positioned in 2009 as compared to 2008 and 2007. The ratio indicates the efficiency of the company to meet its immediate debt. Wesfarmers still need to concentrate and improve it further. The ratio when compared to current ratio also indicates huge inventories. Since, Wesfarmers deal in products where the inventory has to be high so having a low ratio is predictable. Still, Wesfarmers need to improve it so that it presents a better picture. Capital Structure Ratio This ratio is of prime importance and provides relevant information about the company. “It identifies how much of the firm’s assets are financed through debt and includes long term debt”. (Transtutor, 2010) The ratios which help to determine it are as Debt to Equity Ratio: “It determines the proportion of long term debt in relation to the shareholders fund and long term debt”. (Transtutor, 2010) This ratio helps to identify the financial soundness. It is calculated as “Long Term Debts / Equity X 100”. The ratios is as The graph for the same looks as follows The ratio indicates soundness on the part of Wesfarmers. It shows that the company has a scope for more investment through debts. This is a good sign and shows the company has a space for future projects. Wesfarmers has reduced its debt a lot by paying off is a worry and needs to raise it so that it can save on taxes. Wesfarmers need to ensure that it keeps with the industry standard. As Wesfarmers work in a type of market where to grow large debt is needed so the ratio seems to be sound as it gives a scope of investment through debt. Debt Coverage Ratio: It is defined as “the ability to pay the monthly debt on the loan taken on the mortgage of property”. (Financial Modelling Guide, 2010) It is widely used by banks. It is calculated as “Non Current Liabilities / Net Cash Flow from Operating Activities”. The ratio is as The graph for the same looks as follows The ratio for Wesfarmers shows a dip in performance in 2009 compared to 2008. Wesfarmers need to continuously work and ensure that the debt coverage ratio improves further so that growth is better. This will help the company earn more investment through debt as the investor will be comfortable and have less fear regarding their investment. Profitability Ratios Profitability ratios form a very vital part of financial analysis. This ratios help to understand the profit which can be attributed to the different factors which work in tandem to achieve the desired results. Comparing it with the previous years and the competitors’ helps to evaluate the shortcomings, and shows area which needs to be improved. The profitability ratios are as follows Gross Profit Margin: “It is defined as the profit generated after deducting cost of goods sold and before the indirect expenses are accounted for and considers only the direct expenses”. (Kennon, 2010) Gross profit helps to find out the actual profit that is attributed directly to the product. It is calculated as– “Gross Profit / Sales X 100”. The ratio is as The graph for the same looks as follows The ratio indicates consistency for Wesfarmers in 2008 and 2009. Wesfarmers has a sound gross profit indicating soundness in manufacturing process. It also shows that the strategies are well managed. The company needs to work similarly and ensure that the cost of production reduces further Net Profit Margin: “It is defined as the profit generated per dollar of sales and is calculated after all the direct and indirect expense has been considered”. (Kennon, 2010) Organisations prefer this to be high. It is calculated as “Earning before Interest and taxes (EBIT) / Sales X 100”. The ratios is as The graph looks as follows The ratio indicates that the net profit has decreased for Wesfarmers. This is a worrying factor and reflects inefficiency to maintain the indirect expense. When we compare it to the gross profit margin it shows a huge dip signifying the amount of indirect expenses like marketing, distribution and other expenses the company incurs. When we look at the broader picture it shows that Wesfarmers despite having a higher gross profit has a lower net profit showing the amount of indirect cost incurred. It signifies improper management and strategies to cut cost is required. Return on Assets: “It is defined as the amount of profit generated for per dollar of asset”. (Joseph, 2010) It helps to identify whether the assets are utilized properly or underutilized. It is calculated as “Earning before Interest and Taxes (EBIT) / Average assets X 100). The ratios is as The graph looks as follows Here we see that the return on assets for Wesfarmers have improved in 2009 as compared to 2008. The worrying factor for Wesfarmers is that their assets are underutilized. This has resulted in having more assets that warranted. The other important part to note is that retail players have huge assets which results in the ratio being lower. Still, on an overall basis we see that Wesfarmers need to improve their return as it is have very heavy assets and needs to improve it as compared to the competitors. Return on Equity: “It is defined as the profit earned as compared to the equity shareholders i.e. earning per dollar of equity”. (Joseph, 2010) It is calculated as “Net Profit available to ordinary shareholders / Average Equity (excluding minority interest and preference capital) X 100”. The ratios is as follows The graph looks as follows The return for Wesfarmers has improved but is still very low in 2009 as compared to 2006 and 2007. This is a worrying factor and shows the strategies and policies implemented hasn’t been successful. The return for Wesfarmers is very low which might lead to shareholders moving out to other companies or investing in risk free securities. Wesfarmers need to take urgent steps to improve it. Asset Efficiency Ratios Operating ratios forms a very important part as it helps to “show the efficiency of the management and also indicates the company’s efficiency to manage its capital”. (Joseph, 2010) this ratios help to find the efficiency when it comes to turnover. The following ratio helps to calculate the operating efficiency. They are as Asset Turnover Ratio: It is defined as “the total sales generated per revenue of assets”. (Joseph, 2010) It is calculated as “Sales Revenue / Average Total Assets”. The ratios is as follows The graph looks as follows The ratio indicates improvement for Wesfarmers in 2009 as compared to 2008, 2007 and 2006. Wesfarmers has been able to use its assets better in 2009. This has made the ratio to improve. Wesfarmers on the other hand needs to improve this ratio and look towards matching its competitor. Receivable Turnover Ratio: “It is defined as the number of times the company is able to recover the dues from the customer”. (Kennon, 2010) The higher it is the better it is. It is calculated as “Credit Sales / Average Receivable”. The ratio is as The graph looks as Here we see that Wesfarmers has a very good rate and it recovers its chances of bad debts to be less. The good sign for Wesfarmers is that it has improved drastically in 2009 as compared to 2008. If the company can continually improve it then it would be a good sign and reduce the chances of debts. Payable Turnover Ratio: “It is defined as the number of times the creditor is paid in the year and companies generally prefer to maintain it good so that reputation is good”. (Kennon, 2010) It is calculated as “Cost of good sold / Average payable”. The ratios is as follows The graph looks as follows It is seen that Wesfarmers has improved its turnover ratio drastically. This is a good sign and shows that the reputation has improved with the suppliers and also ensures steady supplies. Wesfarmers is ensuring that the ratio is good and reckons a good future. Inventory Turnover Ratio: “It is defined as the number of times inventory is rolled over during a year”. (Joseph, 2010) Companies prefer it to be high. It is calculated as “Cost of Goods Sold / Average Inventory”. The ratios is as The graph looks as follows The above ratio indicates that Wesfarmers has revolved its inventory more in 2009 compared to 2008 and other years. This is a sign of a good company but it needs to be replicated so that the inventory levels come down. This will ensure less money in inventory and help to ensure that the funds are not blocked. Wesfarmers need to improve it and match competitors. Market Performance Ratio This ratios help to find the shareholders confidence in the company. This ratio helps to find the prediction the shareholders have and company’s performance is also reflected here. A company having sound capital market ratios ensures that people prefer this companies and this is seen by the growth in share prices. The ratios which will help to find the capital market are as follows P/E Ratio: “It is defined as the earning the shareholders get for every dollar of earning”. (Kennon, 2010) Companies look it as an important measure to now the growth. It is calculated as “Market Price of Ordinary share / Earning per Share”. The ratio is as follows The graph looks as follows The above ratio for 2009 shows, that Wesfarmers has a good P/E ratio. It can be due to the fact Wesfarmers is growing so it has not declared dividend which has affected it. Overall the performance of both the companies is good but Wesfarmers need to improve it so that the companies are more preferred by shareholders. Earnings per Share: “It is defined as the profit attributed to the equity shareholders”. (Joseph, 2010) It is calculated as “Net profit available to ordinary shareholders / weighted number of ordinary shares on issue”. The ratios is as follows The graph looks as follows The above ratio indicates soundness on the part of Wesfarmers. Wesfarmers has a high earning per share indicating that the shareholders are getting a good return. The return for Wesfarmers has decreased in 2009 as compared to 2008 which shows that the profit has dipped. The overall result for Wesfarmers seems sound and is a good prospect to invest. Dividend per Share: “It is defined as the dividend paid per outstanding equity share”. (Joseph, 2010) It helps to find the dividend equity shareholders receive. It is calculated as “Dividend Paid to ordinary shareholders / Weighted Number of Ordinary shares on issue”. The ratios is as follows The graph looks as follows It is seen that Wesfarmers have given dividend for all the four years. This is a good sign and shows good prospects. It is seen that Wesfarmers has reduced the dividend paid per share which reflects that Wesfarmers has some future projects so the company instead of paying handsomely to the shareholders it is looking to reinvest it. Trend Analysis The trend analysis Wesfarmers shows a bright picture considering the momentum the economies around the world are gathering and also the increase in spending. This will result in profits to soar up. Wesfarmers on the backdrop of it can benefit greatly by proper services and growth the retail sector is witnessing as more consumers are looking towards the retail format to purchase the goods. Wesfarmers can look forward towards increasing the customer base and cut down on expenses. This will act as a tool and will help to increase the profits. This has been further facilitated by the push provided by the government and measures taken to promote economies which will attract people from around the globe. The trend thus predicts a bright and prosperous time for Wesfarmers. There has a scope and an initiative in the right direction can go a long way in improving the performance. Findings The liquidity position especially the current ratio is sound for Wesfarmers. Wesfarmers due to the nature of business have a huge inventory which are affecting the quick ratio but is according to industry standards. The long term debt ratios is sound for Wesfarmers and have the scope to take loan for further development. Wesfarmers have used their short term debt to finance long term assets is a worrying factor and steps needs to be taken. Wesfarmers profit has improved in 2009 as compared to 2008 but it needs to reduce its indirect expenses so that it stays ahead of competition The operating ratio especially the receivable and payable turnover ratio for Wesfarmers has shown tremendous improvement but it needs to still work on it so that it is able to perform at par with the competitors The capital market analysis ratio shows wide improvement for Wesfarmers in 2009 and showing better performance and highlighting that Wesfarmers have better projects and this can help them The financial analysis shows that Wesfarmers performance has improved in 2009 as compared to 2008, 2007 and 2006 Wesfarmers need to improve its strategies and management so that it can stand better and perform on a consistent basis. Conclusion Wesfarmers Limited has been performing in the retail business segment and has been successful. The financial statement even highlights similar facts. Wesfarmers can improve with better strategy. The financial ratios Wesfarmers show some demarcating things and also highlight the different strategies taken by them. This even highlights that companies similar in nature use different strategies and improve their performance. Wesfarmers have room for improvement and with the growth this sector is showing it gives them opportunity to capture a good market and grow. Recommendations Wesfarmers needs to improve its current ratio so that it reflects soundness in its policies and strategies Wesfarmers need to reduce the amount held in inventories as it is high leading to a lot of money being invested Wesfarmers need to take more debt especially long term so that they are able to save on the taxes Wesfarmers needs to improve its operating ratios so that it can match its competitor Wesfarmers needs to reduce its indirect cost, improve efficiency, bring down assets and improve their management Wesfarmers need to improve the inventory turnover ratio Wesfarmers need to ensure that to stay ahead of competition it comes with new projects which helps them to utilize their assets properly and ensure better efficiency Limitations Inflation and changes in price has not been accounted for which might be misleading Historical cost has been considered which might not be true in the present scenario as value changes with time Changes in technology for production, distribution, marketing has not been accounted for which might give different results References Financial Modelling Guide, 2010, “Liquidity ratios”, retrieved on December 15, 2010 from http://www.financialmodelingguide.com/financial-ratios/liquidity-ratios/ Invest smart, 2010, “Wesfarmers Limited (WES)”, Australian Finance Services, retrieved on April 1, 2010 from http://www.investsmart.com.au/shares/asx/Wesfarmers-WES.asp Joseph K, 2010, “Analyzing an income statement: Return on Assets”, about.com guide, The New York Times Company Joseph K, 2010, “Analyzing an income statement: Return on Equity”, about.com guide, The New York Times Company Joseph K, 2010, “Analyzing an income statement: Inventory Turnover”, about.com guide, The New York Times Company Kennon J, 2010, “Analyzing an income statement: Gross Profit”, about.com guide, The New York Times Company Kennon J, 2010, “Analyzing an income statement: Net Profit Margin”, about.com guide, The New York Times Company Kennon J, 2010, “Analyzing an income statement: Receivable Turnover”, about.com guide, The New York Times Company Micro Strategy, 2010, “Financial Analysis”, retrieved on December 15, 2010 from http://www.microstrategy.com/financial-analysis/ Transtutor, 2010, “Capital Structure Ratios”, retrieved on December 15, 2010 from http://www.transtutors.com/finance-homework-help/dividend-decisions-and-tools-of-financial-planning/Capital-Structure-Ratios.aspx Wesfarmers Website, 2010, retrieved on December 15, 2010 from http://www.wesfarmers.com.au/ Wesfarmers Stock Price, 2010, Yahoo Finance, retrieved on April 1, 2010 from http://au.finance.yahoo.com/q?s=WES.AX Appendix 1. Calculation of Current Ratio for Wesfarmers Limited Current Ratio for 2006 = Current Assets / Current Liabilities = 3,133,592 / 2,578,476 = 1.21 Current Ratio for 2007 = Current Assets / Current Liabilities = 4,023,947 /7,181,713 = 0.56 Current Ratio for 2008 = Current Assets / Current Liabilities = 1.09 Current Ratio for 2009 = Current Assets / Current Liabilities = Current Assets / Current Liabilities = 9964 / 7711 = 1.29 2. Calculation of Quick Ratio for Wesfarmers Limited Quick ratio for 2006 = (Current Assets – Inventories) / Current Liabilities = (3,133,592 – 1,146,398) / 2,578,476 = 0.77 Quick ratio for 2007 = (Current Assets – Inventories) / Current Liabilities = (4,023,947 – 1,235,019) / 7,181,713 = 0.38 Quick ratio for 2008 = (Current Assets – Inventories) / Current Liabilities = (8676 – 4638) / 7940 = 0.51 Quick ratio for 2009 = (Current Assets – Inventories) / Current Liabilities = (9964 – 4685) / 7711 = 0.68 3. Calculation of Debt to Equity for Wesfarmers Limited Debt to Equity Ratio for 2006 = Long Term Debts / Equity = 1,220,946 / 3,165,999 = 0.38 Debt to Equity Ratio for 2007 = Long Term Debts / Equity = 5,690,148 / 3,503,134 = 1.62 Debt to Equity Ratio for 2008 = Long Term Debts / Equity = 8256 / 19590 = 0.42 Debt to Equity Ratio for 2009 = Long Term Debts / Equity = 5535 / 24252 = 0.23 4. Calculation of Gross Profit Margin for Wesfarmers Limited Gross Profit Margin for 2006 = Gross Profit / Sales * 100 = (3,491,967 / 7,610,595) * 100 = 45.88% Gross Profit Margin for 2007 = Gross Profit / Sales * 100 = (3,439,478 / 8,238,505) *100 = 41.74% Gross Profit Margin for 2008 = Gross Profit / Sales * 100 = (9862 / 31650) *100 = 31.15% Gross Profit Margin for 2009 = Gross Profit / Sales * 100 = (15304 / 49023) * 100 = 31.21% 5. Calculation of Net Profit Margin for Wesfarmers Limited Net Profit Margin for 2006 = Net Profit / Sales * 100 = (1,048,142 / 7,610,595) * 100 = 13.77 % Net Profit Margin for 2007 = Net Profit / Sales * 100 = (786,338 /8,238,505) * 100 = 9.54 % Net Profit Margin for 2008 = Net Profit / Sales * 100 = 1050 / 31650 *100 = 3.31% Net Profit Margin for 2009 = Net Profit / Sales * 100 = 1535 / 49023 * 100 = 3.13% 6. Calculation of Return on Assets for Wesfarmers Limited Return on Assets for 2006 = Net Income / Total Assets * 100 = (1,048,142 / 7,430,225) * 100 = 14.10% Return on Assets for 2007 = Net Income / Total Assets * 100 = (786,338 /12,076,249) * 100 = 6.51% Return on Assets for 2008 = Net Income / Total Assets * 100 = 1050 / 37306 * 100 = 2.81% Return on Assets for 2009 = Net Income / Total Assets * 100 = 1535 / 39295 * 100 = 3.90% 7. Calculation of Return on Equity for Wesfarmers Limited Return on Equity for 2006 = Net Income / Equity * 100 = (1,048,142 / 3,165,999) *100 = 33.10% Return on Equity for 2007 = Net Income / Equity * 100 = (786,338/3,503,134) * 100 = 22.46% Return on Equity for 2008 = Net Income / Equity * 100 = (1050 / 19590) * 100 = 5.35% Return on Equity for 2009 = Net Income / Equity * 100 = (1535 / 24252) * 100 = 6.32% 8. Calculation of Receivable Turnover Ratio for Wesfarmers Limited Receivable Turnover Ratio for 2006 = Sales / Average Receivable = 7,610,595/ 1,140,644 = 6.67 Receivable Turnover Ratio for 2007 = Sales / Average Receivable = 8,238,505 / 1,512,528 = 5.44 Receivable Turnover Ratio for 2008 = Sales / Average Receivable = 31650 / 2093 = 15.12 Receivable Turnover Ratio for 2009 = Sales / Average Receivable = 49023 / 1893 = 25.9 9. Calculation of Payable Turnover Ratio for Wesfarmers Limited Payable Turnover Ratio for 2006 = Cost of Goods Sold / Average Payable = 7,610,595 / 752,908 = 10.10 Payable Turnover Ratio for 2007 = Cost of Goods Sold / Average Payable = 8,238,505 / 1,254,152 = 6.58 Payable Turnover Ratio for 2008 = Cost of Goods Sold / Average Payable = 21788 / 3966 = 5.49 Payable Turnover Ratio for 2009 = Cost of Goods Sold / Average Payable = 33719 / 4037 = 8.35 10. Calculation of Inventory Turnover Ratio for Wesfarmers Limited Inventory Turnover Ratio for 2006 = Cost of Goods Sold / Average Inventory = 7,610,595 / 1,146,398 = 6.63 Inventory Turnover Ratio for 2007 = Cost of Goods Sold / Average Inventory = 8,238,505 /1,235,019 = 6.67 Inventory Turnover Ratio for 2008 = Cost of Goods Sold / Average Inventory = 21788 / 4638 = 4.7 Inventory Turnover Ratio for 2009 = Cost of Goods Sold / Average Inventory = 33719 / 4685 = 7.2 11. Calculation of Earnings Per Share for Wesfarmers Limited Earnings per Share for 2006 = Net Income / Outstanding shares = 284.0 (given in financial statement) Earnings per Share for 2007 = Net Income / Outstanding shares = 210.5 (given in financial statement) Earnings per Share for 2008 = Net Income / Outstanding shares = 180.6 (given in financial statement) Earnings per Share for 2009 = Net Income / Outstanding shares = 160 (given in financial statement) 12. Calculation of Dividend per Share for Wesfarmers Limited Dividend per Share for 2006 = 2.15 (given) Dividend per Share for 2007 = 2.25(given) Dividend per Share for 2008 = 2 (given) Dividend per Share for 2009 = 1.1(given) 13. Calculation of P/E Ratio for Wesfarmers Limited P/E ratio for 2006 = Market Price of Common Share / Earning per Share = 35.59 (April 1) / 2.84 = 12.53 P/E ratio for 2007 = Market Price of Common Share / Earning per Share = 36.91 (April 1) / 2.1 = 17.58 P/E ratio for 2008 = Market Price of Common Share / Earning per Share = 39.19 (April 1) / 1.81 = 21.65 P/E ratio for 2009 = Market Price of Common Share / Earning per Share = 19.25 (April 1) / 1.1 = 17.5 14. Calculation of Cash Flow Ratio for Wesfarmers Limited Cash Flow Ratio for 2006 = Net Cash from Operating Activities / Current Liabilities X 100 = (1,129,054 / 2,578,476)*100 = 43.78% Cash Flow Ratio for 2007 = Net Cash from Operating Activities / Current Liabilities X 100 = (1,300,595 / 7,181,713) * 100 = 18.10% Cash Flow Ratio for 2008 = Net Cash from Operating Activities / Current Liabilities X 100 = 1451 / 7940 * 100 = 18.27% Cash Flow Ratio for 2009 = Net Cash from Operating Activities / Current Liabilities X 100 = 3044 / 7711 * 100 = 39.48% 15. Calculation of Debt Coverage ratio for Wesfarmers Limited Debt Coverage Ratio for 2006 = Non Current Liabilities / Net Cash Flow from Operating Activities = 1,685,750 / 1,129,054 = 1.49 Debt Coverage Ratio for 2007 = Non Current Liabilities / Net Cash Flow from Operating Activities = 1,391,402 / 1,300,595 = 1.06 Debt Coverage Ratio for 2008 = Non Current Liabilities / Net Cash Flow from Operating Activities = 9776 / 1451 = 6.74 Debt Coverage Ratio for 2009 = Non Current Liabilities / Net Cash Flow from Operating Activities = 7332 / 3044 = 2.41 16. Calculation of Asset Turnover Ratio for Wesfarmers Limited Asset Turnover Ratio for 2006 = Sales Revenue / Average Total Assets = 8,858,801 / 7,430,225 = 1.19 Asset Turnover Ratio for 2007 = Sales Revenue / Average Total Assets = 9,753,713 /12,076,249 = 0.80 Asset Turnover Ratio for 2008 = Sales Revenue / Average Total Assets = 31650 / 37306 = 0.85 Asset Turnover Ratio for 2009 = Sales Revenue / Average Total Assets = 49023 / 39295 = 1.2 Read More