Unit 31 - Practice simulation - Precision Ltd

steveJ

Has anyone done this sim ? Im having a bit of trouble and was wondering if anyone could help ?
It is asking me for asset turnover, but there is no mention of machines ? only labour hours.
What would you class turnover as ? Sales ? Net profit ?

Rinske

The ratio asset turnover is your turnover divided by the fixed (non-current) and net assets (current assets minus current liabilities).

Is that what you are after?

steveJ

So thats Sales over Capital employed ?

Rinske

Basically yes.

Sorry I'm not much help in explaining what it shows, my brain has a complete freeze when it comes to this one.

It shows how much sale you make, compared to the assets that you have in use, but I can't think of a proper example to explain what would be a good result.

For a producing company with a lot of machines you would expect a lower result then from a retailer with hardly any fixed assets, but not sure if that would help at all, as I don't know the question.

steveJ

Yeah. I can understand that it is the turnover that you earn from the assets that you have in use...

The thing that was getting me was that there was no mention of any assets such as machines. I finally found out in the FranK Woods book that it was capital !!

Thanks for your help.

I cant wait to get this unit out of the way !