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