{"id":2039,"date":"2018-03-27T22:06:27","date_gmt":"2018-03-27T22:06:27","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-retailmanagement\/?post_type=chapter&#038;p=2039"},"modified":"2024-04-25T02:51:28","modified_gmt":"2024-04-25T02:51:28","slug":"asset-turnover-rate","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wm-retailmanagement\/chapter\/asset-turnover-rate\/","title":{"raw":"Asset Turnover Rate","rendered":"Asset Turnover Rate"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Objectives<\/h3>\r\n<ul>\r\n \t<li>Analyze the asset turnover rate<\/li>\r\n<\/ul>\r\n<\/div>\r\nAsset turnover, or turnover rate, is a ratio of how many times during a selling season assets are turned over, or used. In other words, it calculates how many sales dollars are generated for each dollar invested in assets. The formula is revenue \/ net assets.\r\n\r\nThink about how this might apply within a retail context. Imagine you\u2019re the front-end manager at your local supermarket, with responsibilities including the coffee shop and floral department. Looking at the income statement for successive periods, you can see that asset turnover is slowing. You know that your buying has been steady, so this must mean that net sales are being affected.\r\n\r\n<img class=\"alignright wp-image-4618\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/2986\/2018\/03\/13175439\/valentines-assortment-300x224.jpg\" alt=\"a store's valentine's day grocery display\" width=\"253\" height=\"189\" \/>\r\n\r\nAs you walk the area, you notice that you still have mugs with hearts on them and vases that say \u201cI love you Mom\u201d on display\u2014still at full retail price. \u00a0This looks like stuff from Valentine\u2019s and Mother\u2019s Day. Remnant inventory is a concern\u2014if they don\u2019t sell, there will be less money to pay for planned purchases. What can you do to help the situation?\r\n\r\nMarkdown the slow selling \u201cold merchandise\u201d in order to stimulate sales and move the merchandise. It may not sell very well, but it will sell a lot better than leaving it fully priced. Of course, this can have a slightly negative impact on gross margin, but it will increase sales. Ultimately, this will make it possible to order new merchandise that will stimulate interest and sales. If possible, it might also be possible to work with the vendor to return the unsold, aging merchandise or to share the costs of markdowns.\r\n<div class=\"textbox tryit\">\r\n<h3>Practice Questions<\/h3>\r\nhttps:\/\/assess.lumenlearning.com\/practice\/826c7539-3df8-4a74-a986-1bcf4b344f17\r\n<\/div>","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Objectives<\/h3>\n<ul>\n<li>Analyze the asset turnover rate<\/li>\n<\/ul>\n<\/div>\n<p>Asset turnover, or turnover rate, is a ratio of how many times during a selling season assets are turned over, or used. In other words, it calculates how many sales dollars are generated for each dollar invested in assets. The formula is revenue \/ net assets.<\/p>\n<p>Think about how this might apply within a retail context. Imagine you\u2019re the front-end manager at your local supermarket, with responsibilities including the coffee shop and floral department. Looking at the income statement for successive periods, you can see that asset turnover is slowing. You know that your buying has been steady, so this must mean that net sales are being affected.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-4618\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/2986\/2018\/03\/13175439\/valentines-assortment-300x224.jpg\" alt=\"a store's valentine's day grocery display\" width=\"253\" height=\"189\" \/><\/p>\n<p>As you walk the area, you notice that you still have mugs with hearts on them and vases that say \u201cI love you Mom\u201d on display\u2014still at full retail price. \u00a0This looks like stuff from Valentine\u2019s and Mother\u2019s Day. Remnant inventory is a concern\u2014if they don\u2019t sell, there will be less money to pay for planned purchases. What can you do to help the situation?<\/p>\n<p>Markdown the slow selling \u201cold merchandise\u201d in order to stimulate sales and move the merchandise. It may not sell very well, but it will sell a lot better than leaving it fully priced. Of course, this can have a slightly negative impact on gross margin, but it will increase sales. Ultimately, this will make it possible to order new merchandise that will stimulate interest and sales. If possible, it might also be possible to work with the vendor to return the unsold, aging merchandise or to share the costs of markdowns.<\/p>\n<div class=\"textbox tryit\">\n<h3>Practice Questions<\/h3>\n<p>\t<iframe id=\"assessment_practice_826c7539-3df8-4a74-a986-1bcf4b344f17\" class=\"resizable\" src=\"https:\/\/assess.lumenlearning.com\/practice\/826c7539-3df8-4a74-a986-1bcf4b344f17?iframe_resize_id=assessment_practice_id_826c7539-3df8-4a74-a986-1bcf4b344f17\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:300px;\"><br \/>\n\t<\/iframe>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-2039\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Asset Turnover Rate. <strong>Authored by<\/strong>: Patrick Williams. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li>Target Store Valentine&#039;s Day. <strong>Authored by<\/strong>: Mike Mozart. <strong>Provided by<\/strong>: Flickr. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/flic.kr\/p\/rbK2aw\">https:\/\/flic.kr\/p\/rbK2aw<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":83755,"menu_order":12,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Asset Turnover Rate\",\"author\":\"Patrick Williams\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"cc\",\"description\":\"Target Store Valentine\\'s Day\",\"author\":\"Mike Mozart\",\"organization\":\"Flickr\",\"url\":\"https:\/\/flic.kr\/p\/rbK2aw\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"bd000eeb-edc1-4d07-a08a-b6551cda5d49, 1ece108a-fed8-4ed5-b21f-3dcdf0036ac0","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-2039","chapter","type-chapter","status-publish","hentry"],"part":2010,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/wm-retailmanagement\/wp-json\/pressbooks\/v2\/chapters\/2039","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/wm-retailmanagement\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/wm-retailmanagement\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-retailmanagement\/wp-json\/wp\/v2\/users\/83755"}],"version-history":[{"count":11,"href":"https:\/\/courses.lumenlearning.com\/wm-retailmanagement\/wp-json\/pressbooks\/v2\/chapters\/2039\/revisions"}],"predecessor-version":[{"id":6477,"href":"https:\/\/courses.lumenlearning.com\/wm-retailmanagement\/wp-json\/pressbooks\/v2\/chapters\/2039\/revisions\/6477"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/wm-retailmanagement\/wp-json\/pressbooks\/v2\/parts\/2010"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/wm-retailmanagement\/wp-json\/pressbooks\/v2\/chapters\/2039\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/wm-retailmanagement\/wp-json\/wp\/v2\/media?parent=2039"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-retailmanagement\/wp-json\/pressbooks\/v2\/chapter-type?post=2039"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-retailmanagement\/wp-json\/wp\/v2\/contributor?post=2039"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-retailmanagement\/wp-json\/wp\/v2\/license?post=2039"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}