What Are the Different Ways to Measure Total Assets?

Total asset operating capability is a measure of an enterprise's ability and efficiency to organize, manage, and operate the entire asset. The total asset operating capacity is an important factor influencing the operating efficiency of an enterprise. Analyzing the total asset turnover rate and its driving factors, and optimizing the asset structure and improving the utilization rate of various assets are important methods to strengthen corporate asset management and improve capital utilization efficiency.

Total asset operating capacity

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Total asset operating capability is a measure of an enterprise's ability and efficiency to organize, manage, and operate the entire asset. The total asset operating capacity is an important factor influencing the operating efficiency of an enterprise. Analyzing the total asset turnover rate and its driving factors, and optimizing the asset structure and improving the utilization rate of various assets are important methods to strengthen corporate asset management and improve capital utilization efficiency.

1. Total asset turnover

(1) Calculation formula

The total asset turnover rate refers to the ratio of the company's net sales revenue to the average balance of assets in a certain period of time. Its calculation formula is

Among them, the average balance of assets = (beginning asset balance + ending asset balance) / 2

Total asset turnover is a measure of the efficiency with which an enterprise uses all assets during the reporting period. If the total asset turnover rate is high, it means that the operating efficiency of all the assets of the enterprise is good, and the sales income is high; on the other hand, if the total asset turnover rate is low, it means that the operating efficiency of all assets is poor, and the sales income is small. Therefore, the level of this indicator ultimately affects the profitability of the enterprise, but when using it, it should also be compared with the ratio of the same industry in order to draw a reasonable conclusion.

(2) Analysis method

First, the industry analysis of total asset turnover. The analysis method of asset turnover rate mainly uses the comparative method. Generally, peer comparison is performed, that is, the comparison of the same industry. It can be compared with the average level of the same industry, or it can be compared with the advanced level of the same industry. The former reflects the general situation in the industry, while the latter reflects the distance from the industry's advanced level or its leading position in the industry. In the actual analysis of the enterprise, a comparison standard can be selected according to needs.

Second, the trend analysis of asset turnover. Because the asset data in the asset turnover rate index is a point in time, it is extremely susceptible to accidental interference or even artificial modification. Therefore, to find out the true status of the company's asset turnover rate, it should first conduct a trend analysis, that is, compare and analyze the changes in the asset turnover rate of each period of the same enterprise in order to grasp its development rules and trends.

2. Total asset turnover days

Total asset turnover days refer to the time required for a company's entire asset turnover once, and its calculation formula is

1. Revenue from main operations and occupation of each operating asset.

To improve the total assets operation capacity of an enterprise, first of all, a reasonable ratio of various assets should be arranged, especially the proportional relationship between current assets and fixed assets, to prevent current assets or fixed assets from being idle. Second, improve the utilization of various assets, especially the receivables, inventory items and fixed assets in the current assets. The improvement in the utilization efficiency of fixed assets mainly depends on whether all the fixed assets are put into use and whether the fixed assets that are put into use are operating at full capacity. To this end, the investment scale of fixed assets must be determined in combination with the company's production capacity and production scale: Finally, it is necessary to maximize the sales income while maintaining the total asset size. The more the main business income realized, the better the asset utilization efficiency.

2. Industry and business background.

Different industries have different asset occupations. For example, the manufacturing industry needs to occupy a large amount of machinery and equipment, raw materials, and finished products. The service industry, especially labor-intensive enterprises or knowledge-based service industries, has very little asset occupation except human resources. . Large asset occupancy results in slow asset turnover; low asset occupancy results in fast asset turnover. In addition, enterprises with different operating backgrounds have different trends in their asset turnover: the more backward and traditional their operations and management are, the slower their asset turnover. Under the modern operating management model, asset management turnover has accelerated a lot.

3 Operating cycle.

The length of the operating cycle (that is, the operating cycle) can reflect the utilization efficiency of the assets. The sum of the days of receivables and inventory turnover can simplify the calculation of the operating cycle. The shorter the business cycle, the stronger the liquidity of the assets, the more sales the company realizes, the more accumulated sales revenue, the faster the asset turnover, and vice versa.

4 The composition and quality of assets.

Enterprise assets are divided into current assets and non-current assets according to their realization speed and value transfer form. Current assets are usually short-term assets, and non-current assets are usually long-term assets. The total amount of assets of an enterprise at a certain point in time is the basis for the enterprise to obtain income and profits. When an enterprise's long-term assets, fixed assets take up too much or there are problematic assets, and the quality of assets is not high, it will form a backlog of funds, low asset liquidity, and even insufficient working capital. In addition, the quantity and quality of current assets usually determine the strength of a company's realizing ability, while the quantity and quality of non-current assets usually determine the production and operation ability of an enterprise. Non-current assets can only generate sales revenue with the sale of products. With a certain amount of assets, the larger the proportion of non-current assets, the smaller the turnover value realized by the enterprise, and the slower the turnover rate of assets. vice versa.

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