Calculation of efficiency ratios, Financial Accounting

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Calculation of Efficiency ratios  -

     
         
   

2008

2009

2010

M

Net Sales

8506616

11993699

16064038

N

Inventory

1388168

2030972

2651760

O

Total Assets

3103645

4049092

5131809

P

Accounts Receivables

57662

90380

95928

Q

Current Assets

1784275

2353271

2905145

R

Current Liabilities

992683

1340291

1743763

S

Working Capital

791592

1012980

1161382

T

Cost of Goods Sold

6361271

9053219

12281744

         
 

Inventory Turnover (T / N)

4.58

4.46

4.63

         
 

Asset Turnover (M / O)

2.74

2.96

3.13

         
 

Receivables Turnover (M / P)

147.53

132.70

167.46

         
 

Net Working Capital Turnover (M / S)

10.75

11.84

13.83

The turnover ratios as above are showing a mixed trend. i.e. Working Capital and Asset turnover has shown continuous improvement over the last two years but Receivables and inventory have not been properly managed in 2009.

The firm needs to focus on management of receivables and inventory, though there has been an improvement in the receivables turnover and inventory turnover in 2010, they are not stable and sufficient steps should be taken so as to ensure continuous efficiency in assets utilization.


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