The asset turnover ratio (ATR) is the ratio of a company?s revenues to the value of its assets (indicating its efficiency in deploying its assets). We should not use the standard deviation to compare ATR variation among industrial sectors because firms with large asset bases (e.g., utilities, financial) typically have lower mean ATR than, say, retail firms.

(a) Use the sample data to calculate the coefficient of variation for each sector.

(b) Which sector has the highest degree of relative variation? The lowest?

(c) If someone (incorrectly) used the standard deviations to compare variation, would the ranking among sectors be the same?

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Financial Retail Utilities Mean 2.088 0.0441 0.0743 St Dev 0.484 0.0083 0.0297