Financial Ratio on Assessing The ACTIVITY Of Assets Utilised

Continued from my last article, we will now look at the financial ratio for assessing the activity of assets deployed by the company. Essentially, the activity ratios measure the efficiency of managing or using of assets like

total assets,
accounts receivable,
inventory, and
accounts payable.

Ratio	TOTAL ASSETS TURNOVER
Formula	Net Sales Total Assets (or average) or Accounts Receivable, Inventory
Use	Measure the efficiency of the usage of total assets in generating sales.
Values	Varies. The higher is the more effective
Interpretation	Comparing similar periods and similar industry statistics determines measures of efficiencies by which the assets are employed in the business.

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April 5, 2006 Posted in: Ratio Analysis

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