Efficiency ratios, Financial Accounting

Efficiency Ratios - These ratios include Receivables Turnover, Inventory Turnover, Asset Turnover and Net Working Capital Turnover ratios. Efficiency ratios demonstrate the utilization of Assets of the company so as to generate Revenue. i.e. the best utilization of assets to generate income is shown by efficiency ratios.

Ø  Receivables Turnover = Total Revenue / Net Receivables

Ø  Inventory Turnover =  Cost of Revenue / Inventory

Ø  Asset Turnover = Total Revenue / Total Assets

Ø  Net Working Capital Turnover = Total Revenue or Sales / Net Working Capital

Posted Date: 7/26/2012 5:51:05 AM | Location : United States

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