|
Ratio
|
Ratio
|
Discussion
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|
Inventory Turnover
|
COGS / Average Inventory
|
Measures inventory management. Inventory should be turned over rapidly,
rather than accumulating in warehouses.
|
|
Receivables Turnover
|
Sales / Average Accounts Receivables
|
Measures the effectiveness of credit policies and needed level of
receivables investment for sales.
(Also called the collection period).
|
|
Payables Turnover
|
Sales / Average Accounts Payables
|
Payables represent a financing source for operations.
|
|
Working Capital Turnover
|
Sales / Average Working Capital
|
Measures how much working (operating) capital is needed for sales.
|
|
Fixed Asset Turnover
|
Sales / Average Fixed Assets
|
Measures the efficiency of net fixed asset (property, plant &
equipment after accumulated depreciation) investments.
|
|
Total Asset Turnover
|
Sales / Average Total Assets
|
Represents the overall (comprehensive) efficiency of assets to sales.
|
|
Cash Turnover
|
Sales / Average Cash (which usually includes marketable securities)
|
|
|
Payables Turnover
|
Sales / Average Accounts Payable
|
|
