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National Grid PLC  (NYSE:NGG) Asset Turnover: 0.11 (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. National Grid PLC's Revenue for the six months ended in Sep. 2017 was $8,912 Mil. National Grid PLC's Total Assets for the quarter that ended in Sep. 2017 was $79,045 Mil. Therefore, National Grid PLC's asset turnover for the quarter that ended in Sep. 2017 was 0.11.

Asset Turnover is linked to ROE % through Du Pont Formula. National Grid PLC's annualized ROE % for the quarter that ended in Sep. 2017 was 7.57%. It is also linked to ROA % through Du Pont Formula. National Grid PLC's annualized ROA % for the quarter that ended in Sep. 2017 was 2.28%.


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.

National Grid PLC Annual Data

Mar08 Mar09 Mar10 Mar11 Mar12 Mar13 Mar14 Mar15 Mar16 Mar17
Asset Turnover Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.28 0.29 0.24 0.23 0.23

National Grid PLC Semi-Annual Data

Mar08 Sep08 Mar09 Sep09 Mar10 Sep10 Mar11 Sep11 Mar12 Sep12 Mar13 Sep13 Mar14 Sep14 Mar15 Sep15 Mar16 Sep16 Mar17 Sep17
Asset Turnover Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.13 0.11 0.10 0.13 0.11

Calculation

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

National Grid PLC's Asset Turnover for the fiscal year that ended in Mar. 2017 is calculated as

Asset Turnover
=Sales/Average Total Assets
=Revenue (A: Mar. 2017 )/( (Total Assets (A: Mar. 2016 )+Total Assets (A: Mar. 2017 ))/ 2 )
=18561.7283951/( (83951.5669516+81283.9506173)/ 2 )
=18561.7283951/82617.7587844
=0.22

National Grid PLC'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: Mar. 2017 )+Total Assets (Q: Sep. 2017 ))/ 2 )
=8912/( (81283.9506173+76806.6666667)/ 2 )
=8912/79045.308642
=0.11

* 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.

National Grid PLC's annulized ROE % for the quarter that ended in Sep. 2017 is

ROE %(Q: Sep. 2017 )
=Net Income/Total Equity
=1802.66666667/23810.1728395
=(Net Income / Revenue)*(Revenue / Total Assets)*(Total Assets / Total Equity)
=(1802.66666667 / 17824)*(17824 / 79045.308642)*(79045.308642/ 23810.1728395)
=Net Margin %*Asset Turnover*Leverage Ratio
=10.11 %*0.2255*3.3198
=ROA %*Leverage Ratio
=2.28 %*3.3198
=7.57 %

Note: The Net Income data used here is two times the semi-annual (Sep. 2017) net income data. The Revenue data used here is two times the semi-annual (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:

National Grid PLC's annulized ROA % for the quarter that ended in Sep. 2017 is

ROA %(Q: Sep. 2017 )
=Net Income/Total Assets
=1802.66666667/79045.308642
=(Net Income / Revenue)*(Revenue / Total Assets)
=(1802.66666667 / 17824)*(17824 / 79045.308642)
=Net Margin %*Asset Turnover
=10.11 %*0.2255
=2.28 %

Note: The Net Income data used here is two times the semi-annual (Sep. 2017) net income data. The Revenue data used here is two times the semi-annual (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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