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Customer assets margin

Two important financial ratios used for analysis by investors and creditors include the total asset turnover ratio and the profit margin. Total asset ratio falls under the category of asset utilization ratios, which are important for measuring the effectiveness of management. Profit margin falls under the category of profitability ratios, which periodically measures the financial success of a company. Understanding these two ratios can help managers make the adjustments necessary to improve the company’s financial performance. Investors who understand these two ratios can make informed decisions about investing in a company's financial securities.

Total Asset Turnover

Total asset turnover measures how efficiently companies use their assets to generate revenue. It is calculated by dividing sales revenue by total assets. For example, if a company’s annual sales revenue is $150, 000 and total assets equal $40, 000, the company turned over its assets 3.75 times during the year. Sales revenue is money that comes into the firm because of a company’s normal business operations, and is found on the income statement. Total assets include the average amount of total assets for the year, and the information is found on a company’s balance sheet.

Total Asset Turnover Analysis

The total asset ratio is properly interpreted when compared to a company’s past performance. A higher total asset turnover ratio is more favorable than a lower one. Companies that see continual increases in turnover ratio are improving how efficiently managers use the company’s assets to generate revenue. Companies with a declining asset turnover ratio must analyze their financial statements to understand the reason for the decline. For example, a decline in total asset turnover ratio might result from an increase in fixed assets or a decline or slow increase in revenue.

Related Reading: Advantages & Disadvantages of Total Assets Turnover

Profit Margin

Profit margin, often called net profit margin, is a common ratio used to measure a company’s profitability and how well a company controls its cost. Net profit margin measures how much profit a company earns for every dollar of sales. Expressed as a percentage, net profit margin is calculated by dividing net income by sales revenue and multiplying the total by 100. For example, if a company’s net income is $100, 000 and the sales revenue is $500, 000, then the net profit is 20 percent.

Popular Q&A

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What kind of margins can non-asset based freight logistics providers expect? - Quora

According to Trans Core Broker Survey:
Profitability for survey respondents declined to 14.9% compared to last
year's 15.6% average. Gross margins actually improved in 2010 for
asset-based brokers, but their non-asset-based counterparts saw a
reduction in gross profits in 2010 compared to 2009.
If anybody would like to see a copy of the complete survey please send me a message.

avatar
What is the best solution for managing a database of customers and assets in a sortable table? (Open Source preferred but not necessary) - Quora


Profitability for survey respondents declined to 14.9% compared to last
year's 15.6% average. Gross margins actually improved in 2010 for
asset-based brokers, but their non-asset-based counterparts saw a
reduction in gross profits in 2010 compared to 2009.
If anybody would like to see a copy of the complete survey please send me a message.

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