Question

Real World FAI EX 6-32 Asset turnover OBJ.5 Kroger Co., a national supermarket chain, reported the following data (in millions) in its financial statements for a recent year: Total revenue $108,465 Total assets at end of year 30,556 Total assets at beginning of year 29,281 a. Compute the asset turnover. Round to two decimal places. Tiffany & Co. is a large North American retailer of jewelry with an asset tumover of 0.86. Why would Tiffany's asset turnover be lower than that of Kroger? b.

Answer 1

Part-a:-

Computation of Asset Turnover

Asset Turnover= Total Revenue/ Average Asset

=108465/29918.5=3.63

Part-b

Krooger Co. Asset Tunoveer is 3.63 and Tifany & Co. Asset Turnover is 0.86 which is significantly lower than Krooger Co. The reason might be due to lower Revenue