Asset management ratio

The asset management ratio tells about how successfully the company is using its assets to generate sales. The greater the ratio, the better utilization there will be.

The asset management ratio includes fixed asset turnover, return on equity and total asset turnover as these ratios relatively use the method which measures the company’s way of utilization of assets to generate sales revenue.

The company has 0.605 of fixed asset turnover which states that every $1 of theasset is generating net sales of 0.065 and this shows that the assets are not being utilized efficiently and hence the company should increase its utilization in future and should generate more sales with the existing assets. The efficiency should be that the company should have an asset turnover of either 1 which states that for every $1 of theasset, $1 of sales is being generated. The competitor such as the Acadia Realty Trust has fixed asset turnover of 0.09, whereas the competitor Agree Realty Corp has 0.11 of fixed asset turnover which is above the fixed asset turnover of preferred apartment communities.

The company has -0.5% of the return on equity and this return is negative due to the fact that the company has anet loss in the operating year and this further shows that the company’s performance is not as good as it should be. The competitor (Acadia Realty Trust) has 5.4% of return on equity and another competitor (Agree Realty Corp) has areturn on equity of 7.96%, whereas the industry average is 9.93%. This shows that the company is not generating enough profit on the investments and the shareholders might not be happy with the company’s performance and can sell the shares in future.

The total asset turnover shows the sales generated by the company in comparison to the utilization of the total assets. The higher the utilization, the better it is. The company has total asset turnover of 0.083, whereas the competitor (Acadia Realty Trust) has 0.05 of total asset turnover and another competitor (AgreeRealty Corp) has total Asset turnover of 0.10. However, the industry average is 0.12 and this shows that the company has low asset utilization and this can be the major reason for the loss being shown in the statement of the operations of the

company.

 

 

 

Asset Management ratio
  PAC Acadia Realty Trust (competitor) Agree Realty Corp Industry average
Fixed Asset turnover 0.605 0.090 0.11  
Return on equity (%) -0.5% 5.4% 7.96% 9.93%
Total Asset turnover 0.083 0.050 0.10 0.12

 

Debt management

The company’s debt management shows that how successful is the company in managing its debt and how well it is managing the debt as debt management consists of the ratios of debt/equity ratio, interest cover and financial leverage. These all ratios tend to tell about the company’s gearing level and the ability of the company to pay its interest and the debt in future.

The debt to equity ratio compares the company’s debt to the overall equity of the company and it tells about the gearing of the company as a high level of gearing will lead to higher interest payments for the company…………..

 

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