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CVS Health Corp (NYSE:CVS)
Asset Turnover
0.48 (As of Sep. 2014)

Asset Turnover measures how quickly a company turns over its asset through sales. It is calculated as Revenue divided by Average Total Assets. CVS Health Corp's Revenue for the three months ended in Sep. 2014 was $35,021 Mil. CVS Health Corp's Average Total Assets for the quarter that ended in Sep. 2014 was $73,085 Mil. Therefore, CVS Health Corp's asset turnover for the quarter that ended in Sep. 2014 was 0.48.

Asset Turnover is linked to Return on Equity (ROE) through Du Pont Formula. CVS Health Corp's annualized Return on Equity (ROE) for the quarter that ended in Sep. 2014 was 9.95%. It is also linked to Return on Assets (ROA) through Du Pont Formula. CVS Health Corp's annualized Return on Assets (ROA) for the quarter that ended in Sep. 2014 was 5.19%.


Definition

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

CVS Health Corp's Asset Turnover for the fiscal year that ended in Dec. 2013 is calculated as

Asset Turnover
=Sales/Average Total Assets
=Revenue (A: Dec. 2013 )/( (Total Assets (A: Dec. 2012 )+Total Assets (A: Dec. 2013 ))/ 2 )
=126761/( (65912+71526)/ 2 )
=126761/68719
=1.84

CVS Health Corp's Asset Turnover for the quarter that ended in Sep. 2014 is calculated as

Asset Turnover
=Sales/Average Total Assets
=Revenue (Q: Sep. 2014 )/( (Total Assets (Q: Jun. 2014 )+Total Assets (Q: Sep. 2014 ))/ 2 )
=35021/( (72593+73576)/ 2 )
=35021/73084.5
=0.48

* All numbers are in millions except for per share data and ratio. All numbers are in their own 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.

CVS Health Corp's annulized Return on Equity (ROE) for the quarter that ended in Sep. 2014 is

Return on Equity (ROE)(Q: Sep. 2014 )
=Net Income/Average Shareholder Equity
=3792/38117
=(Net Income / Revenue)*(Revenue / Average Total Assets)*(Average Total Assets / Average Equity)
=(3792 / 140084)*(140084 / 73084.5)*(73084.5 / 38117)
=Net Profit Margin*Asset Turnover*Leverage Ratio
=2.71 %*1.9167*1.9174
=Return on Assets*Leverage Ratio
=5.19 %*1.9174
=9.95 %

Note: The Net Income data used here is four times the quarterly (Sep. 2014) net income data. The Revenue data used here is four times the quarterly (Sep. 2014) revenue data.

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

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

CVS Health Corp's annulized Return on Assets (ROA) for the quarter that ended in Sep. 2014 is

Return on Assets (ROA)(Q: Sep. 2014 )
=Net Income/Average Total Assets
=3792/73084.5
=(Net Income / Revenue)*(Revenue / Average Total Assets)
=(3792 / 140084)*(140084 / 73084.5)
=Net Profit Margin*Asset Turnover
=2.71 %*1.9167
=5.19 %

Note: The Net Income data used here is four times the quarterly (Sep. 2014) net income data. The Revenue data used here is four times the quarterly (Sep. 2014) revenue data.

* All numbers are in millions except for per share data and ratio. All numbers are in their own 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

Revenue, Total Assets, Return on Equity, Return on Assets


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

CVS Health Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
turnover 2.442.482.442.031.511.611.561.691.891.85

CVS Health Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
turnover 0.470.460.480.470.470.480.470.450.480.48
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