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Primus Guaranty Ltd  (OTCPK:PRSG) Asset Turnover: 0.18 (As of Dec. 2011)

Asset Turnover measures how quickly a company turns over its asset through sales. It is calculated as Revenue divided by Total Assets. Primus Guaranty Ltd's Revenue for the three months ended in Dec. 2011 was $103.17 Mil. Primus Guaranty Ltd's Total Assets for the quarter that ended in Dec. 2011 was $590.23 Mil. Therefore, Primus Guaranty Ltd's asset turnover for the quarter that ended in Dec. 2011 was 0.18.

Asset Turnover is linked to ROE % through Du Pont Formula. Primus Guaranty Ltd's annualized ROE % for the quarter that ended in Dec. 2011 was -208.20%. It is also linked to ROA % through Du Pont Formula. Primus Guaranty Ltd's annualized ROA % for the quarter that ended in Dec. 2011 was 68.56%.


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.

Primus Guaranty Ltd Annual Data

Dec02 Dec03 Dec04 Dec05 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11
Asset Turnover Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.03 -2.00 1.97 0.42 -0.04

Primus Guaranty Ltd Quarterly Data

Mar07 Jun07 Sep07 Dec07 Mar08 Jun08 Sep08 Dec08 Mar09 Jun09 Sep09 Dec09 Mar10 Jun10 Sep10 Dec10 Mar11 Jun11 Sep11 Dec11
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 0.08 0.14 0.10 -0.47 0.18

Calculation

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

Primus Guaranty Ltd's Asset Turnover for the fiscal year that ended in Dec. 2011 is calculated as

Asset Turnover
=Sales/Average Total Assets
=Revenue (A: Dec. 2011 )/( (Total Assets (A: Dec. 2010 )+Total Assets (A: Dec. 2011 ))/ 2 )
=-24.48/( (634.859+585.824)/ 2 )
=-24.48/610.3415
=-0.04

Primus Guaranty Ltd's Asset Turnover for the quarter that ended in Dec. 2011 is calculated as

Asset Turnover
=Sales/Average Total Assets
=Revenue (Q: Dec. 2011 )/( (Total Assets (Q: Sep. 2011 )+Total Assets (Q: Dec. 2011 ))/ 2 )
=103.167/( (594.628+585.824)/ 2 )
=103.167/590.226
=0.17

* 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.

Primus Guaranty Ltd's annulized ROE % for the quarter that ended in Dec. 2011 is

ROE %(Q: Dec. 2011 )
=Net Income/Total Equity
=404.64/-194.3515
=(Net Income / Revenue)*(Revenue / Total Assets)*(Total Assets / Total Equity)
=(404.64 / 412.668)*(412.668 / 590.226)*(590.226/ -194.3515)
=Net Margin %*Asset Turnover*Leverage Ratio
=98.05 %*0.6992*-3.0369
=ROA %*Leverage Ratio
=68.56 %*-3.0369
=-208.20 %

Note: The Net Income data used here is four times the quarterly (Dec. 2011) net income data. The Revenue data used here is four times the quarterly (Dec. 2011) 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:

Primus Guaranty Ltd's annulized ROA % for the quarter that ended in Dec. 2011 is

ROA %(Q: Dec. 2011 )
=Net Income/Total Assets
=404.64/590.226
=(Net Income / Revenue)*(Revenue / Total Assets)
=(404.64 / 412.668)*(412.668 / 590.226)
=Net Margin %*Asset Turnover
=98.05 %*0.6992
=68.56 %

Note: The Net Income data used here is four times the quarterly (Dec. 2011) net income data. The Revenue data used here is four times the quarterly (Dec. 2011) 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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