Investopedia

http://www.investopedia.com/university/ViewEPWPrintable.aspx?url=...

Financial Ratios - Operating Efficiency Ratios

Filed Under Professional Education OPERATING EFFICIENCY RATIOS

1. Total Asset Turnover This ratio measures a company's ability to generate sales given its investment in total assets. A ratio of 3 will mean that for every dollar invested in total assets, the company will generate 3 dollars in revenues. Capital-intensive businesses will have a lower total asset turnover than non-capital-intensive businesses. Formula 7.25 Total asset turnover = net sales / average total assets

2. Fixed-Asset Turnover This ratio is similar to total asset turnover; the difference is that only fixed assets are taken into account. Formula 7.26 Fixed-asset turnover = net sales / average net fixed assets 3.Equity Turnover This ratio measures a company's ability to generate sales given its investment in total equity (common shareholders and preferred stockholders). A ratio of 3 will mean that for every dollar invested in total equity, the company will generate 3 dollars in revenues. Formula 7.27 Equity turnover = net sales / average total equity by

Investopedia.com
No writer biography is available.

1 of 1

28-07-2012 14:49