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Morgan Stanley  (NYSE:MS) Asset Turnover: 0.01 (As of Sep. 2017)

Asset Turnover measures how quickly a company turns over its asset through sales. It is calculated as Revenue divided by Total Assets. Morgan Stanley's Revenue for the three months ended in Sep. 2017 was \$9,197 Mil. Morgan Stanley's Total Assets for the quarter that ended in Sep. 2017 was \$847,355 Mil. Therefore, Morgan Stanley's asset turnover for the quarter that ended in Sep. 2017 was 0.01.

Asset Turnover is linked to ROE % through Du Pont Formula. Morgan Stanley's annualized ROE % for the quarter that ended in Sep. 2017 was 9.03%. It is also linked to ROA % through Du Pont Formula. Morgan Stanley's annualized ROA % for the quarter that ended in Sep. 2017 was 0.84%.

Historical Data

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

* Premium members only.

Morgan Stanley Annual Data

 Nov07 Nov08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Asset Turnover 0.03 0.04 0.04 0.04 0.04

Morgan Stanley Quarterly Data

 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 Asset Turnover 0.01 0.01 0.01 0.01 0.01

Calculation

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

Morgan Stanley's Asset Turnover for the fiscal year that ended in Dec. 2016 is calculated as

 Asset Turnover = Sales / Average Total Assets = Revenue (A: Dec. 2016 ) / ( (Total Assets (A: Dec. 2015 ) + Total Assets (A: Dec. 2016 )) / 2 ) = 34631 / ( (787465 + 814949) / 2 ) = 34631 / 801207 = 0.04

Morgan Stanley's Asset Turnover for the quarter that ended in Sep. 2017 is calculated as

 Asset Turnover = Sales / Average Total Assets = Revenue (Q: Sep. 2017 ) / ( (Total Assets (Q: Jun. 2017 ) + Total Assets (Q: Sep. 2017 )) / 2 ) = 9197 / ( (841016 + 853693) / 2 ) = 9197 / 847354.5 = 0.01

* 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.

Morgan Stanley's annulized ROE % for the quarter that ended in Sep. 2017 is

 ROE % (Q: Sep. 2017 ) = Net Income / Total Equity = 7124 / 78902 = (Net Income / Revenue) * (Revenue / Total Assets) * (Total Assets / Total Equity) = (7124 / 36788) * (36788 / 847354.5) * (847354.5/ 78902) = Net Margin % * Asset Turnover * Leverage Ratio = 19.37 % * 0.0434 * 10.7393 = ROA % * Leverage Ratio = 0.84 % * 10.7393 = 9.03 %

Note: The Net Income data used here is four times the quarterly (Sep. 2017) net income data. The Revenue data used here is four times the quarterly (Sep. 2017) 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:

Morgan Stanley's annulized ROA % for the quarter that ended in Sep. 2017 is

 ROA % (Q: Sep. 2017 ) = Net Income / Total Assets = 7124 / 847354.5 = (Net Income / Revenue) * (Revenue / Total Assets) = (7124 / 36788) * (36788 / 847354.5) = Net Margin % * Asset Turnover = 19.37 % * 0.0434 = 0.84 %

Note: The Net Income data used here is four times the quarterly (Sep. 2017) net income data. The Revenue data used here is four times the quarterly (Sep. 2017) 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.

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