How do you calculate the turnover ratio?

The asset turnover ratio measures the efficiency of a company's assets in generating revenue or sales. It compares the dollar amount of sales (revenues) to its total assets as an annualized percentage. Thus, to calculate the asset turnover ratio, divide net sales or revenue by the average total assets.

What is the formula for the receivables turnover ratio?

The accounts receivable turnover ratio formula is as follows: Net credit sales are sales where the cash is collected at a later date. The formula for net credit sales is = Sales on credit – Sales returns – Sales allowances.

What is the accounts payable turnover ratio?

Accounts payable turnover is a ratio that measures the speed with which a company pays its suppliers. If the turnover ratio declines from one period to the next, this indicates that the company is paying its suppliers more slowly, and may be an indicator of worsening financial condition.

What is the asset turnover ratio?

Asset turnover is a financial ratio that measures the value of revenue generated by a business relative to its average total assets for a given fiscal year. It is an indicator of how efficient the company is at using both current and fixed assets to produce revenue.