Activity ratio, Managerial Accounting

Accounting ratios that determine a firm's ability to convert various accounts within their balance sheets into sales or cash.

Companies will usually try to shift their production into cash or sales as soon as possible as this will usually lead to higher revenues. 

These types of ratios are often used when doing fundamental analysis on different companies. The inventory turnover ratio and asset turnover ratio and are excellent examples of activity ratios.

 

 

Posted Date: 7/27/2012 8:06:13 AM | Location : United States







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