Fixed assets turnovershows the measure of efficiency with which fixed assets are employed and a high ratio shows a high degree of efficiency in utilizing assets and a low ratio shows poor utilization of assets. At times this ratio is high because it shows the assets are old and depreciated. Tesco’s turnover for 2005 was 2.19, 2006 was 1.70, 2007 was 1.67, 2008 was 1.58 and in 2009 it is 1.39.
This turnover is average and since there is no mention of old assets that have been depreciated so the turnover shows that the assets of the company could be utilized in a much better way. The turnover shows a falling trend this time which means the company is not utilizing its fixed assets that well and can improve with the improving trend of the company in general and this can be overlooked by investors thus Tesco will still be attractive for investors due to overall performance which has been good.
Total assets turnover includes fixed and current assets and measures how efficiently all assets have been employed. Tesco’s turnover in 2005 was 1.82, 2006 was 1.75, 2007 was 1.72, 2008 was 1.57 and in 2009 it is 1.18. This again shows somewhat an average trend since it has fallen by 2009 and of course this affect on total assets can be due to a low fixed assets turnover ratio. Thus again the overall performance of the company will outshine the effect of this ratio. But of course Tesco needs to improve these ratios for even better performance in 2010.
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