![]() ![]() Its equation is: Total assets turnover ratio = Total assets Sales Īssec management ratios are mportant - Imms need to manage assets emcienluy vecause capilal oolamed to acquire tnose dssets is expensive. Its equation is: Fixed assets turnover ratio = Net fixed assets Sales ratio measures how effectively the firm uses its total assets and whether the firm generates enough sales given its total assets. If its trend has been rising and plant and equipment. Its equation is: DSO = Days sales outstanding = Average sales per day Receivables = Annual sales /365 Receivables The DSO can also be evaluated by comparison with the terms on which the firm its goods. The days sales outstanding (DSO) ratio is also called the average collection period (ACP). The rationale for this measurement is that inventory is carried at cost, so sales in the numerator overstates the true inventory turnover ratio. Its equation is: Inventory turnover ratio = Inventories Sales replaces sales in the numerator with. The inventory turnover ratio indicates how many times during the year inventory and restocked. These ratios include the: (1) Inventory turnover ratio, (2) Days sales outstanding, (3) Fixed assets turnover, and (4) Total assets turnover. Its equation is: Total assets turnover ratio = Total assets Sales Īsset management ratios are important - firms need to manage assets efficiently because capital obtained to acquire those assets is expensive. ![]() The fixed assets turnover ratio measures how effectively the firm uses its plant and equipment. If its trend has been rising and not changed, this would indicate a need to speed up the collection of receivables. Its equation is: DSO = Days sales outstanding = Average sales per day Receivables = Annual sales /365 Receivables The DSO can also be evaluated by comparison with the terms on which the firm has its goods. An alternative definition of the inventory turnover ratio replaces sales in the numerator with. Its equation is: Inventory turnover ratio = Inventories Sales Excess inventory is unproductive and represents an investment with a rate of return. The inventory turnover ratio indicates how many times during the year inventory is restocked. ![]() Asset management ratios are important - firms need to manage assets efficiently because capital obtained to acquire those assets is expensive. ![]()
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