by BizMiner
Free business statistics and financial ratios
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BizMiner Financial
Analysis Edge #5
Tips on Balance
Sheet and Financial Ratios Research
Financial Ratios for Efficiency Measurement
These financial ratios are generally understood as measures of firm and industry efficiency:
1. Accounts Receivables Turnover
Sales/ Accounts Receivable
Related financial ratio: Collection Period or Day’s Receivables
Accounts Receivable Turnover X 365
This ratio measures the number of times that receivables turn over during the year. The higher the turnover of receivables, the shorter the time between sale and cash collection. If a company's Turnover Rate is significantly lower than industry norms, the underlying reason (poor collection methods, high risk customers, low sales) needs to be pinpointed.
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