ratio analysis

hi guys,

Did you have any trouble with practice problems for R27, particularly with Q7? Shouldn’t the asset turnover ratio be the same if we exlude the investments in associates? Obviously, there is no effect on Revenue (so far okay), but I think there isn’t any impact on Assets either (exluding investments, but adding cash or some other form of assets since the investment had to be paid for: TA (3844) - average inv. (196) + cash. Not really consistent to me. What am I missing?


The task here is to identify the asset turnover ratio for Colorful concepts without the effect of its investment. So basically you just need to remove the Investments in Associates part from the Assets. It doesn’t say how much the asset turnover would be if the company hadn’t invested at all in associates.

It is basically the same process as with the Nestlé example in the reading.