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GuruFocus has detected 6 Warning Signs with Capital Southwest Corp \$CSWC.
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Capital Southwest Corp (NAS:CSWC)
Asset Turnover
0.02 (As of Sep. 2016)

Asset Turnover measures how quickly a company turns over its asset through sales. It is calculated as Revenue divided by Average Total Assets. Capital Southwest Corp's Revenue for the three months ended in Sep. 2016 was \$4.62 Mil. Capital Southwest Corp's Average Total Assets for the quarter that ended in Sep. 2016 was \$294.07 Mil. Therefore, Capital Southwest Corp's asset turnover for the quarter that ended in Sep. 2016 was 0.02.

Asset Turnover is linked to Return on Equity (ROE) through Du Pont Formula. Capital Southwest Corp's annualized Return on Equity (ROE) for the quarter that ended in Sep. 2016 was 10.02%. It is also linked to Return on Assets (ROA) through Du Pont Formula. Capital Southwest Corp's annualized Return on Assets (ROA) for the quarter that ended in Sep. 2016 was 9.41%.

Definition

Asset Turnover measures how quickly a company turns over its asset through sales.

Capital Southwest Corp's Asset Turnover for the fiscal year that ended in Mar. 2016 is calculated as

 Asset Turnover = Sales / Average Total Assets = Revenue (A: Mar. 2016 ) / ( (Total Assets (A: Mar. 2015 ) + Total Assets (A: Mar. 2016 )) / 2 ) = 9.16 / ( (776.872 + 284.493) / 2 ) = 9.16 / 530.6825 = 0.02

Capital Southwest Corp's Asset Turnover for the quarter that ended in Sep. 2016 is calculated as

 Asset Turnover = Sales / Average Total Assets = Revenue (Q: Sep. 2016 ) / ( (Total Assets (Q: Jun. 2016 ) + Total Assets (Q: Sep. 2016 )) / 2 ) = 4.623 / ( (280.856 + 307.275) / 2 ) = 4.623 / 294.0655 = 0.02

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Companies with low profit margins tend to have high asset turnover, while those with high profit margins have low asset turnover. Companies in the retail industry tend to have a very high turnover ratio.

Explanation

Asset Turnover is linked to Return on Equity (ROE) through Du Pont Formula.

Capital Southwest Corp's annulized Return on Equity (ROE) for the quarter that ended in Sep. 2016 is

 Return on Equity (ROE) (Q: Sep. 2016 ) = Net Income / Average Shareholder Equity = 27.672 / 276.1065 = (Net Income / Revenue) * (Revenue / Average Total Assets) * (Average Total Assets / Average Equity) = (27.672 / 18.492) * (18.492 / 294.0655) * (294.0655 / 276.1065) = Net Profit Margin * Asset Turnover * Leverage Ratio = 149.64 % * 0.0629 * 1.065 = Return on Assets * Leverage Ratio = 9.41 % * 1.065 = 10.02 %

Note: The Net Income data used here is four times the quarterly (Sep. 2016) net income data. The Revenue data used here is four times the quarterly (Sep. 2016) revenue data.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

It is also linked to Return on Assets (ROA) through Du Pont Formula:

Capital Southwest Corp's annulized Return on Assets (ROA) for the quarter that ended in Sep. 2016 is

 Return on Assets (ROA) (Q: Sep. 2016 ) = Net Income / Average Total Assets = 27.672 / 294.0655 = (Net Income / Revenue) * (Revenue / Average Total Assets) = (27.672 / 18.492) * (18.492 / 294.0655) = Net Profit Margin * Asset Turnover = 149.64 % * 0.0629 = 9.41 %

Note: The Net Income data used here is four times the quarterly (Sep. 2016) net income data. The Revenue data used here is four times the quarterly (Sep. 2016) revenue data.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Be Aware

In the article Joining The Dark Side: Pirates, Spies and Short Sellers, James Montier reported that In their US sample covering the period 1968-2003, Cooper et al find that firms with low asset growth outperformed firms with high asset growth by an astounding 20% p.a. equally weighted. Even when controlling for market, size and style, low asset growth firms outperformed high asset growth firms by 13% p.a. Therefore a company with fast asset growth may underperform.

Therefore, it is a good sign if a company's asset turnover is consistent or even increases. If a company's asset grows faster than sales, its asset turnover will decline, which can be a warning sign.

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Capital Southwest Corp Annual Data

 Mar07 Mar08 Mar09 Mar10 Mar11 Mar12 Mar13 Mar14 Mar15 Mar16 turnover 0.01 0.01 0.03 0.01 0.02 0.02 0.02 0.02 0.01 0.02

Capital Southwest Corp Quarterly Data

 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 turnover 0.00 0.00 0.01 0.00 0.00 0.00 0.01 0.01 0.02 0.02
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