Turnover ratio / activity ratio /efficiency ratio

  • Meaning of Turnover ratio = Turnover ratio refers to the it check the performance of the company and How the company utilized its resources . it also show the efficiency of the company . the company efficiency is better or not than the previous year and also compare to other company . The ANS is written in times . turnover ratio include like a
  • Inventory turnover ratio or stock turnover ratio
  • Fixed assets turnover ratio
  • total assets turnover ratio
  • working capital turnover ratio
  • current assets turnover ratio
  • Receivable turnover ratio or debtors turnover ratio
  • Average collection period or days sales outstanding
  • Creditors turnover ratio or A/C payable turnover ratio

Formula of turnover ratio or Activity ratio

  1. inventory or stock turnover ratio = COGS/ average inventory or sales / inventory
  2. working capital turnover ratio = sales / working capital (C.A – C.L )
  3. Total assets turnover ratio = sales / total assets
  4. Debtors or Receivable turnover ratio = credit sales / A.C receivable
  5. Days sales outstainding or average collection period = 365 / debtors turnover ratio (DTO )
  6. fixed assets turnover ratio = sales / fixed assets
  7. creditors turnover ratio = credit purchase / Account payable

Leave a Reply

Your email address will not be published. Required fields are marked *